Abstract
Developing a robust stock market portfolio is a critical endeavor, necessitating strategic methodologies supported by quantitative analysis. This abstract outlines a study focused on constructing an optimal portfolio comprising 12 diverse stocks and SPX, operating under five pragmatic constraints. Both the Markowitz and Index models are employed to analyze and optimize the portfolio. With powerful tools in Python, the outcome of those thirteen-asset allocations is easily revealed, and by comparison between the two models, similarities and differences are concluded in charts and figures. The major conclusion is that MM and IM can reach a similar Sharpe ratio even though the allocations of different assets are very different in the American Stock Market. Besides, compared with the Markowitz model, the Index model is easier to calculate, which may be helpful when the assets in the portfolio increase. Under five constraints, different portfolio presents different Sharpe ratio and Standard deviation, and thus the outcomes may vary as the constraint changes.
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