Recent advances in quantum hardware offer new approaches to solve various optimization problems that can be computationally expensive when classical algorithms are employed. We propose a hybrid quantum-classical algorithm to solve a dynamic asset allocation problem where a target return and a target risk metric (expected shortfall) are specified. We propose an iterative algorithm that treats the target return as a constraint in a Markowitz portfolio optimization model, and dynamically adjusts the target return to satisfy the targeted expected shortfall. The Markowitz optimization is formulated as a Quadratic Unconstrained Binary Optimization (QUBO) problem. The use of the expected shortfall risk metric enables the modeling of extreme market events. We compare the results from D-Wave’s 2000Q and Advantage quantum annealers using real-world financial data. Both quantum annealers are able to generate portfolios with more than 80% of the return of the classical optimal solutions, while satisfying the expected shortfall. We observe that experiments on assets with higher correlations tend to perform better, which may help to design practical quantum applications in the near term.

Novel magnetic materials are important for future technological advances. Theoretical and numerical calculations of ground-state properties are essential in understanding these materials, however, computational complexity limits conventional methods for studying these states. Here we investigate an alternative approach to preparing materials ground states using the quantum approximate optimization algorithm (QAOA) on near-term quantum computers. We study classical Ising spin models on unit cells of square, Shastry-Sutherland and triangular lattices, with varying field amplitudes and couplings in the material Hamiltonian. We find relationships between the theoretical QAOA success probability and the structure of the ground state, indicating that only a modest number of measurements ( ≲ 100 ) are needed to find the ground state of our nine-spin Hamiltonians, even for parameters leading to frustrated magnetism. We further demonstrate the approach in calculations on a trapped-ion quantum computer and succeed in recovering each ground state of the Shastry-Sutherland unit cell with probabilities close to ideal theoretical values. The results demonstrate the viability of QAOA for materials ground state preparation in the frustrated Ising limit, giving important first steps towards larger sizes and more complex Hamiltonians where quantum computational advantage may prove essential in developing a systematic understanding of novel materials. This article is part of the theme issue ‘Quantum annealing and computation: challenges and perspectives’.

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