Research on Capital Asset and Investment Portfolio

Abstract

Throughout history, using capital assets models, such as Markowitz and Index model, is important for investors to compare different portfolios, and decide the asset arrangement. Doing statistical analysis and comparisons of stock prices for different companies is necessary when we want to find the optimal portfolio to make an investment. This research analyzed six corporations' stock indexes from 2000 to 2020 by using the Markowitz model and Index model. Besides, five different constraints are put and discussed to make the research more useful to implement in realistic settings. The results calculated using the Markowitz and Index model are similar, even though there are slight differences under different constraints. The real meaning of our research is that using the Markowitz model leads to higher returns for the portfolio investment when both models are set to have a maximum standard deviation. Our research provides empirical insight into the investor's decision.