Use this Nobel-Prize winning technique to determine the ideal quantity of stocks to hold in your portfolio.

Possibly one of the worst mistakes that any trader or investor could make would be to place all of their capital into a single position.

Though the effective degree of diversification is frequently contended and subject to personal opinion, there is no doubt that some systematic approach to portfolio allocation should be implemented.

Of the many means of portfolio allocation and optimization, this story aims to investigate the effects of Markowitz mean-variance optimization. I will demonstrate the effects of investing in an increasing quantity of low-covaried assets by portraying the efficient frontier of three hypothetical portfolios. This will show you how diversification and an optimal distribution of portfolio equity can reduce your investment risks while increasing your average return.

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