Elaborative Research between Markowitz Model and the Index Model

Abstract

In today’s world, most people are not satisfied with only one income stream, people are actively seeking more income other than salary. Thus, many of those choose to invest, as the most popular way for additional income. This paper is aiming to dig deeply into the method of optimizing the Asset portfolios. The result of the analysis is that the Markowitz model and Index model are returning a similar result on the analysis of 10 selected stocks, and both model favors the Travelers Companies Inc and SPX in most cases. It turns out that investors would love to put more weight on Insurance company since insurance business return would not be affected by market. This feature grants insurance business a relatively steady returns and dividend due to its low variance. Plus, Insurance companies can deliver solid long-term returns.