Portfolio (finance)

It is a generally accepted principle that a portfolio is designed according to the investor's risk tolerance, time frame and investment objectives.

The set of Pareto-optimal returns and risks is called the Pareto efficient frontier for the Markowitz portfolio selection problem.

[1] Recently, an alternative approach to portfolio diversification has been suggested in the literatures that combines risk and return in the optimization problem.

[3] A portfolio's asset allocation may be managed utilizing any of the following investment approaches and principles: dividend weighting, equal weighting, capitalization-weighting, price-weighting, risk parity, the capital asset pricing model, arbitrage pricing theory, the Jensen Index, the Treynor ratio, the Sharpe diagonal (or index) model, the value at risk model, modern portfolio theory and others.

[4] There are also several models for measuring the performance attribution of a portfolio's returns when compared to an index or benchmark, partly viewed as investment strategy.