Analysis of the Energy Company Stock's Portfolio in the Past Twenty Years by Using the Markowitz Model and the Index Model

Abstract

Setting an optimal portfolio is an important issue to all the people who are in the stock market. Some people use their experience to get profit by buying and selling the energy company’s tocks, but they lack a good portfolio for them to not only decrease the risk but also get more profits. Therefore, the goal of this paper is to decide which one between Markowitz Model and Index Model is best tool for investors to set their energy companies’ portfolio. The research method is to collect data from Yahoo Finance, and then using the data to calculate the minimum variance point, maximum sharp ratio, minimum variance frontier, efficient frontier, inefficient frontier, and capital allocation line for both models. By comparing and analyzing these data, the optimal portfolio can be obtained for investing the energy companies. The result of this research is that both models are good tools for investors to establish their portfolio regard to the energy market.