Seven-Stock Portfolio Efficient Frontier

Enter Stock Data





Portfolio Returns and Risks

Stock 1 (%) Stock 2 (%) Stock 3 (%) Stock 4 (%) Stock 5 (%) Stock 6 (%) Stock 7 (%) Expected Return (%) Risk (Std Dev %)

Understanding the Efficient Frontier

The **Efficient Frontier** represents the best possible portfolios are those that provide **the highest return for the least amount of risk**.

How Portfolio Return Works

A portfolio’s return is based on the returns of the stocks it contains, weighted by how much is invested in each.

- The **weight** of each stock determines its contribution to the portfolio. - The **expected return** reflects the potential gain from the portfolio.

Why Correlation Matters

Correlation measures how stocks move in relation to each other. It plays a key role in risk reduction:

How Portfolio Risk is Determined

The risk of a portfolio depends on:

Lower correlation leads to better diversification and lower overall risk.