Application of Markowitz and Index Model during the period of COVID-19

Abstract

Markowitz Model and Index Model both play a important part in making strategies when investors decide to make an investment. There is no denying that nobody can give you a guarantee that he can determine whether the stocks’ price will rise or not in the future. However, if you can use these two models correctly, you will acquire quite a lot of effective information such as which stock you should long or short and what percentage you should allocate to each stock which can help you make an investment strategy accurate relatively. As is known to all, whole world suffered from COVID-19 not only in death but finance. If we use the previous strategy to invest, it will definitely not work in current environment. But that no mean that we don’t have the opportunity to invest. What we should do is research the new investment strategy to adapt to current environment and embrace the better chance to earn. In order to research special investment method different from the period before the COVID-19 by building these two models, this paper select S&P500 and 8 companies which are large scale and great enough to have the qualification to behalf of their industry.