Corner portfolio

Corner portfolio

In a two stocks portfolio, the minimum attainable risk (variance) and the lowest return would be the corner portfolio. As the number of stocks increases in a portfolio, the corner portfolio would be the one with lowest return and risk combination.





Corner portfolio

In the above diagram, AB shows the risk-return combination of several portfolios. Each number indicates the number of stocks in the portfolio. When the number of stock increases, the risk and return decline. Tracing the AB line shows the corner portfolio. An efficient frontier may have one or two security portfolio at the low or high extremes, if the percentages of allocations to stocks are free to take any value
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