Maximizing Profit and Managing Risk: A Sector-based Diversification Strategy for Stock Portfolio Optimization

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Authors
Wright, Tyler
Conwell, Joseph
Issue Date
2023-04-28
Type
Other
Keywords
Scholarship Sewanee 2023 , University of the South , Finance Poster , Senior Comp , Scholarship Sewanee
Abstract
Our senior thesis for the Finance Major involves managing a portfolio of five stocks with a figurative investment of $1,000,000. We carefully select stocks based on historical performance, macroeconomic trends, and information from the Federal Reserve, and diversify our portfolio to mitigate risks. Our investment strategy includes two risky stocks (NVIDIA and VMware) and three safer stocks (JM Smucker, Kinder Morgan, and Walt Disney). We utilize Portfolio Tdetermine optimal heory and Capital Asset Pricing Model (CAPM) to weights for our portfolio. Despite small fluctuations in stock prices over the past three months, our portfolio has yielded $180,207, thanks to our use of CAPM to take on more risk.
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