Python For Finance Portfolio Optimization

Portfolio optimization is the process of selecting the best portfolio (asset distribution),out of the set of all portfolios being considered, according to some objective. The objective typically maximizes factors such as expected return, and minimizes costs like financial risk.
-Wikipedia

In this article I will show you how to create a program to optimize a stock portfolio using the efficient frontier & Python ! In modern portfolio theory, the efficient frontier is an investment portfolio which occupies the ‘efficient’ parts of the risk-return spectrum. Formally, it is the set of portfolios which satisfy the condition that no other portfolio exists with a higher expected return but with the same standard deviation of return.

The Sharpe Ratio goes further: it actually helps you find the best possible proportion of these stocks to use, in a portfolio.
- Moneychimp

The Sharpe ratio was developed by William F. Sharpe in 1966. The ratio describes how much excess return you receive for the extra volatility you endure for holding a riskier asset. It measures the performance of an investment compared to a risk-free asset (bonds, treasury bills, etc.), after adjusting for its risk. It is defined as the difference between the returns of the investment and the risk-free return…