The Capital Allocation Line and The Efficient Frontier Explained
69A full introduction to the Capital Allocation Line and the Efficient Frontier, including the portfolio construction using a Risk-Free Rate Asset and the tangent with the Efficient Frontier. An explanation of the concepts around constructing a portfolio with a specific risk by adjusting the ratio of the risk-free asset and the risky portfolio is explained step-by-step. This technique also helps identify the optimal point on the Efficient Frontier to inform the allocations of the more risky assets. The Capital Allocation Line is also sometimes termed the Capital Market Line.
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This is Episode 23 in the Darwinex 'Institutional-Grade Risk Management Techniques' Playlist: https://youtube.com/playlist?list=PLv-cA-4O3y979Ltr9wQ2lRJu1INve3RCM
Video Contents:
00:00 The Capital Allocation Line and The Efficient Frontier
00:26 Why Darwinex?
01:21 Key Modern Portfolio Theory Terminology
04:05 The Capital Allocation Line and Risk-Free Rate
05:10 Constructing the Capital Allocation Line
08:34 Summary and Next Episodes
Content Disclaimer: Past performance is not a reliable indicator of future results. The contents of this video (and all other videos by the presenter) are for educational purposes only and are not to be construed as financial and/or investment advice.
Risk disclosure: https://www.darwinex.com/legal/risk-disclaimer