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Risk and Return - Portfolio: Siby M Yohannan
Risk and Return - Portfolio: Siby M Yohannan
SIBY M YOHANNAN
CORRELATION
• Combining assets that have a low correlation with each other can reduce the overall
variability of a portfolio’s returns.
Capital asset pricing model (CAPM
• The capital asset pricing model generally relies on historical data. The betas may or
may not actually reflect the future variability of returns.
• It is based on an assumed efficient market with the following characteristics: many
small investors, all having the same information and expectations with respect to
securities; no restrictions on investment, no taxes, and no transaction costs; and
rational investors, who view securities similarly and are risk averse, preferring
higher returns and lower risk
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