Scenario 5: Maximum Return

This portfolio provides a significantly higher expected return, while the risk, although being over 50%, is proportionally modest. The combination of large long-short bets is attracting but may not be feasible for retail investors (brokers may not allow to use the money received from short-selling to get into long positions due to margin restrictions). Either way, risk-embracing investors should consider this strategy. I will explore more viable options for this type of investor crowd in my future articles.

One can see how basic knowledge of statistics and Excel can cater to one’s investment needs. Just because you chose the right assets does not mean you have the right portfolio for yourself.