Station 5: Understanding Portfolio Construction (UI+)

Description

Understanding Portfolio Construction is where all the concepts introduced in Modules 1 to 4 come together. In a portfolio, risk and return take on new characteristics and asset classes begin to behave differently than when they were in isolation: normally volatile stocks can exert a moderating influence, while steady bonds can emerge as a catalyst for change.

Asset classes behave differently in a portfolio setting. Your preferences as to which you hold, in what combination, and for how long add yet another dimension to the complexity.

Modern Portfolio Theory (MPT) describes these transformations, interactions, and permutations in the context of an investment portfolio. One peculiarity is that adding a risky asset to a portfolio can actually reduce overall risk, which for many seems counter-intuitive. Another key insight is that a portfolio containing two or more risky assets can be engineered to maximise return for a given level of risk, or minimise risk for a given level of return. There is only a finite set of portfolios that can be constructed this way, and collectively these trace out a curve referred to as the Efficient Frontier.

To add to your learning experience, this package also gives you access to the Learning Lounge, designed for those who wish to delve deeper into a subject and understand its nuts and bolts.

System Requirements

See System Requirements in the Coggno Knowledge Base