Section 2
Portfolio Considerations
Book
Version 3
By Boundless
By Boundless
Boundless Finance
Finance
by Boundless
3 concepts
Portfolio Diversification and Weighting
Weighting is the percent allocation a particular investment type receives within a portfolio.
Implications for Expected Returns
The expected return of a diversified portfolio is the expected return of each of its underlying investments times the weight the investment receives.
Implications for Variance
A diversified portfolio containing investments with small or negative correlation coefficients will have a lower variance than a single asset portfolio.