Principals underlying the analysis and evaluation of rational portfolio choices based on risk return trade-offs and efficient diversification.

The analysis of rational portfolio choices based on the efficient use of risk.Synonyms: MPT

In making investment decisions, adherents of modern portfolio theory focuses on potential return in relation to potential risk. The strategy is to evaluate and select individual securities as part of an overall portfolio rather than solely for their own strengths or weaknesses as an investment.Asset allocation is a primary tactic according to theor [..]

Definition Overall investment strategy that seeks to construct an optimal portfolio by considering the relationship between risk and return, especially as measured by alpha, beta, and R-squared. This [..]

An approach to quantifying risk and return in a portfolio of assets. Developed in 1959 by Harry Markowitz, MPT is the foundation for present-day principles of investment diversification. It emphasizes the portfolio rather than individual assets, and how assets perform in relation to each other based on the assumption that investors can benefit from [..]

Investment approach that tries to construct a portfolio offering maximum expected returns for a given level of risk tolerance. See beta

Modern Portfolio Theory (MPT) is a theory of investment which tries to maximize return and minimize risk by carefully choosing different assets. MPT is a mathematical formulation of the concept of div [..]

Modern Portfolio Theory statistics measure a securities historical volatility, risk, and correlation. See also: Alpha, Beta, R-Squared and Standard Deviation.

Principals underlying the analysis and evaluation of rational portfolio choices based on risk return trade-offs and efficient diversification.