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Portfolio Optimization using Markowitz Model

In this 1-hour long project-based course, you will learn how to optimize a two-asset portfolio at the optimum risk-to-return with finding the maximum Sharpe ratio. To achieve this, we will be working around the Sharpe ratios of two given assets, we will find the efficient frontier of these assets, and find where they intersect the best by utilizing the Markowitz Model.

The content of this course draws on the knowledge of Project: Compare Stock Returns with Google Sheets, so you are highly recommended to take it first if you are not familiar with how the Sharpe ratio is calculated and don’t have an understanding of how the risk-to-return metrics work.

Note: This course works best for learners who are based in the North America region. We're currently working on providing the same experience in other regions.

This course's content is not intended to be investment advice and does not constitute an offer to perform any operations in the regulated or unregulated financial market.

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Syllabus

Portfolio Optimization using Markowitz Model

By the end of the project, you will be able to optimize a two-asset portfolio at the optimum risk-to-return with finding the maximum Sharpe ratio. To achieve this, we will be working around the Sharpe ratios of two given assets, we will find the efficient frontier of these assets, and find where they intersect the best by utilizing the Markowitz Model. The content of this course draws on the knowledge of Project: Compare Stock Returns with Google Sheets, so you are highly recommended to take it first if you are not familiar with how the Sharpe ratio is calculated and don’t have an understanding of how the risk-to-return metrics work.

Good to know

Know what's good

, what to watch for

, and possible dealbreakers

Teaches the fundamentals of how to find the maximum Sharpe ratio for a portfolio using the Markowitz Model

Well-suited for learners who have already taken the recommended Project: Compare Stock Returns with Google Sheets

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Reviews summary

Well-received portfolio optimization course

Students say this well-received course is good but difficult. According to reviews, its engaging assignments include projects and lectures that are very simple and useful. However, learners also said that they wished the course was more in-depth. Overall, students say that this course is a practical introduction to portfolio optimization with tools that they can use in Excel

Engaging and useful projects and lectures

"Good but difficult."

"very simple and helpful , all these tools should be put in 1 big course"

"This guided course help me to understand about the two asset diversification portfolio"

Could be more in-depth

"THEORY PART NOT EXPLAINED CLEARLY, EFFICIENT FRONTIER WAS A HOGWASH"

"Clear and easy-to-follow steps. However, it's too easy and took me way less than a third of the advertised time to complete everything."

"Very simple. You can find a more interesting and interactive course on Youtube taught by many Professors."

Activities

Be better prepared before your course. Deepen your understanding during and after it. Supplement your coursework and achieve mastery of the topics covered in Portfolio Optimization using Markowitz Model with these activities:

Review linear algebra and optimization techniques

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Brush up on linear algebra and optimization techniques, which provide the mathematical foundation for portfolio optimization.

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Review lecture notes or textbooks from previous courses on linear algebra.
Practice solving linear algebra problems, such as matrix operations and systems of equations.
Explore online resources or videos on optimization techniques, such as quadratic programming.

Join a study group to discuss portfolio optimization concepts

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Connect with classmates or fellow learners to form a study group and engage in discussions, knowledge sharing, and problem-solving related to portfolio optimization.

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Reach out to classmates or join online forums to find potential study partners.
Establish a regular meeting schedule and set goals for each session.
Prepare discussion topics and questions in advance to guide the sessions.
Take turns presenting concepts, solving problems, and sharing perspectives.

Follow tutorials on the Markowitz Model

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Work through guided tutorials or video demonstrations to gain hands-on experience applying the Markowitz Model to portfolio optimization problems.

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Search for tutorials on the Markowitz Model using online resources or MOOC platforms.
Follow the steps in the tutorials to build a portfolio optimization model using real-world data.
Experiment with different input parameters to observe the impact on portfolio performance.

Four other activities

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Solve practice problems on portfolio optimization

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Engage in repetitive practice exercises to solidify your understanding of portfolio optimization concepts and techniques.

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Find practice problems on portfolio optimization from textbooks, online resources, or MOOC platforms.
Solve the problems independently and check your answers against provided solutions.
Identify areas where you need further practice and focus your efforts accordingly.

Create a visual representation of the efficient frontier

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Create a graphical or visual representation of the efficient frontier to visualize the relationship between risk and return for different portfolio combinations.

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Gather data on the expected returns and standard deviations of different assets or portfolios.
Use a spreadsheet or visualization software to plot the data points on a scatter plot.
Draw a curve to connect the data points, representing the efficient frontier.

Create a portfolio optimization tool

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Build a software tool or spreadsheet-based application that automates the process of portfolio optimization using the Markowitz Model.

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Design the architecture and functionality of the tool.
Develop the code or formulas to implement the Markowitz Model.
Test and validate the tool using historical data.
Write documentation and user instructions for the tool.

Develop a presentation on portfolio optimization for a non-technical audience

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Create a presentation that explains the concepts and benefits of portfolio optimization to a non-technical audience, such as investors or financial advisors.

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Research and gather information on portfolio optimization, including case studies and real-world examples.
Develop a clear and concise presentation structure, using visuals and examples to illustrate the concepts.
Practice delivering the presentation to ensure smooth flow and audience engagement.

Career center

Learners who complete Portfolio Optimization using Markowitz Model will develop knowledge and skills that may be useful to these careers:

Portfolio Manager

Portfolio Managers are responsible for managing investment portfolios for clients. This course will teach them how to construct and optimize portfolios using the Markowitz model.

See salaries and explore the career path for Portfolio Manager

Quantitative Analyst

Quantitative Analysts use mathematical and statistical models to solve financial problems. This course will strengthen their understanding of portfolio optimization techniques.

See salaries and explore the career path for Quantitative Analyst

Investment Analyst

Investment Analysts create models to optimize portfolios across multiple asset classes. This course will teach them how to optimize a portfolio using the Markowitz model and will help them enhance their portfolio management skills.

See salaries and explore the career path for Investment Analyst

Financial Analyst

Financial Analysts use their expertise to make recommendations on investment decisions. This course can strengthen their portfolio optimization skills and help them make more informed decisions.

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Financial Planner

Financial Planners help individuals and families manage their finances. This course will help them understand the principles of portfolio optimization and how to apply them in practice.

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Risk Manager

Risk Managers identify and mitigate financial risks for organizations. This course will help them understand how to measure and manage portfolio risk.

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Actuary

Actuaries use mathematical and statistical techniques to assess financial risks. This course will help them build a foundation in portfolio optimization.

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Investment Banker

Investment Bankers advise companies on financial transactions, including mergers and acquisitions. This course will help them understand the fundamentals of portfolio optimization and how to use it in financial modeling.

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Data Scientist

Data Scientists use data to solve business problems. This course will help them develop skills in data analysis and modeling, which can be applied to portfolio optimization.

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Consultant

Consultants advise organizations on a variety of business issues, including investment strategy. This course will provide them with a foundation in portfolio optimization, which they can apply to their consulting work.

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Insurance Analyst

Insurance Analysts assess the financial risks of insurance policies. This course will help them build a foundation in portfolio optimization and risk management.

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Statistician

Statisticians collect, analyze, and interpret data. This course will help them develop skills in data analysis and modeling, which can be applied to portfolio optimization.

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Economist

Economists study the economy and make predictions about its future performance. This course will help them build a foundation in financial markets and portfolio optimization.

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Teacher

Teachers educate students in a variety of subjects, including finance and economics. This course may be useful for teachers who want to learn more about portfolio optimization and incorporate it into their teaching.

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Financial Journalist

Financial Journalists write about financial markets and investments. This course may be useful for financial journalists who want to improve their understanding of portfolio optimization.

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Reading list

We've selected 13 books that we think will supplement your learning. Use these to develop background knowledge, enrich your coursework, and gain a deeper understanding of the topics covered in Portfolio Optimization using Markowitz Model.

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Provides a comprehensive overview of the psychology of thinking, including portfolio optimization. It valuable resource for anyone interested in the theory and practice of portfolio optimization.

Portfolio Optimization using Markowitz Model

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What's inside

Syllabus

Good to know

Save this course

Reviews summary

Well-received portfolio optimization course

Activities

Career center

Reading list

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