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Level 6 Diploma in Accounting and Business

Portfolio Theory and Diversification Strategies

AB606 · Investment and Risk Management — Week 10 of 16

CourseAB606
Week10 of 16
SemesterII
TutorOnline in the course chat

This week’s topics

Portfolio Theory and Diversification Strategies

  1. Modern Portfolio Theory (MPT) and the efficient frontier
  2. Covariance, correlation coefficients, and unsystematic risk reduction
  3. Strategic vs tactical asset allocation and regular portfolio rebalancing
  4. Evaluating risk-adjusted returns using Sharpe, Treynor, and Jensen's Alpha
  5. The Sharpe Ratio
  6. Efficient vs Inefficient Portfolios

What you will be able to do

  • 3.1 Analyse types of investment risk.
  • 3.2 Assess how investment risks can be mitigated.

Activity

Start with this week’s 2 videos, then: Seminar, guided reading and a short written task: analyse types of investment risk.

Study materials

Videos

  • The Sharpe Ratio · YouTube · Edspira · 6 min · for registered students
  • Efficient vs Inefficient Portfolios · YouTube · Edspira · 6 min · for registered students
  • Portfolio Theory and the Capital Asset Pricing Model · YouTube · Gresham College · 65 min · for registered students

Further resources

  • MIT 15.401 Finance Theory I, lecture notes: Portfolio Theory · PDF · Other, slides · for registered students
  • Principles of Finance 2e, ch. 15: How to Think about Investing · PDF · OpenStax, textbook chapter; pp. 455–482 · for registered students
  • MIT 15.401 Finance Theory I, lecture notes: The CAPM and APT · PDF · Other, slides · for registered students
Materials marked “for registered students” open in the student portal, which is set up as soon as you receive final acceptance.
Week 9Week 11
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Admitted students ask questions on this week’s page in the student portal: an AI assistant trained on the course answers first, and during the course’s timetabled classes Connect to your tutor brings your tutor into the chat, who may start a call if needed.

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Course plan
  • Week 1: Financial Market Architecture
  • Week 2: Trading Mechanics and Investment Venues
  • Week 3: Macroeconomic and Geopolitical Impacts on Markets
  • Week 4: Behavioural Finance and Trader Psychology
  • Week 5: Foundations of Technical Analysis
  • Week 6: Technical Indicators and Oscillator Application
  • Week 7: Technical Trading Strategies in Practice
  • Midterm: Midterm evaluation
  • Week 9: Taxonomy and Measurement of Investment Risk
  • Week 10: Portfolio Theory and Diversification Strategies
  • Week 11: Derivatives and Active Risk Mitigation
  • Week 12: Applying Investment and Risk Management in practice: case s…
  • Week 13: Assignment workshop: research, planning and referencing
  • Week 14: Assignment workshop: drafting, feedback and improvement
  • Week 15: Review and coursework completion
  • Final: Final assessment and submission
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