Efficient Frontier and Portfolio Optimization Explained | The Ultimate Guide

In this comprehensive video, "Efficient Frontier and Portfolio Optimization Explained | The Ultimate Guide," Ryan O'Connell, CFA, FRM, breaks down the essentials of efficient frontier and portfolio optimization, with modern portfolio theory explained in detail. Starting with an overview of risk and return for a single stock, the video then explores risk and return in a two-asset portfolio. Ryan explains the efficient frontier for a two-asset portfolio and dives into the intricacies of portfolio optimization. The Sharpe Ratio and Capital Allocation Line (CAL) are also thoroughly explained, providing a complete guide to optimizing your investment strategy. Whether you're a beginner or an experienced investor, this ultimate guide will enhance your understanding of efficient frontier and portfolio optimization.

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Chapters:
0:00 - Risk & Return: Single Stock
1:50 - Risk & Return: Two Asset Portfolio
4:16 - Efficient Frontier: Two Asset Portfolio
5:09 - The Efficient Frontier Explained
7:53 - Portfolio Optimization Explained
9:35 - Sharpe Ratio Explained
10:20 - Capital Allocation Line (CAL) Explained

*Disclosure: This is not financial advice and should not be taken as such. The information contained in this video is an opinion. Some of the information could be wrong. This channel is owned and operated by Portfolio Constructs LLC. Some of the links above are affiliate links, meaning, at no additional cost to you, I will earn a commission if you click through and make a purchase.

[RyanOConnellCFA]

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[nhungnguyen-xjjp]

Thank you!!. I’m taking an investment planning now, and your video help me understand the concepts easier

[Danielkaminer]

have to admit that you explain better, than ex JPM professors with PHDs

[T.H.Man.]

I have learned a lot from your content in my CFA journey. Keep it up!!

[adityabhosale]

Thank you very much Ryan.
I study finance at LSE and I find your videos extremely helpful! I hope your channel achieves much more success in the future!

[ukaszleszczynski]

Thank you! Lot better explanation than from books, etc! Really good job Ryan, keep doing! Lukas from Poland:)!

[PandaPong]

Nice video! I like the last minute of the video where you explained the implications of the CAL, and how you can use leverage to achieve an expected return higher than the tangency point. I feel like the relationship between portfolio weights/expected returns along the CAL wasn’t explained well in school

[georgekiossev]

Dear Ryan, can you advise which is better for preparing for the exam - the cfa books or the schweser ones?

[joaocarlosschmittdesiqueir]

amazing content. if one wants to optimize their portfolio by sortino ratio, is it expected to have a lower risk than by sharpe? Also, optimize by treynor ratio would be a great strategy when one assumes that the market wont have a good performance?

[RakanXYZ]

I have spent alot of time thinking about my cash position in my portfolio relative to the efficient frontier. I was hoping I could use some of this methodology to help me find the optimal cash position in my portfolio, or would something like VaR be better?

[wirsyt]

Sorry for the noob question, but how do we get the Risk percentage to begin with? Is that the beta?

[MondayEhiedu]

Good evening Mr Connell, how can i link up with you on LinkedIn?