Efficient Frontier & Capital Market Line (Excel)

Overview

This project implements a portfolio optimization model in Excel, focusing on the Efficient Frontier and Capital Market Line (CML).

The model evaluates risk-return trade-offs and identifies optimal portfolio allocation between assets.

Objective

To analyze portfolio performance and determine the optimal allocation that maximizes the Sharpe ratio.

Model Structure

1. Portfolio Model

• Weight of stocks
• Weight of bonds
• Portfolio return
• Portfolio risk (volatility)
• Sharpe ratio
• Efficient Frontier curve

2. Capital Market Line (CML)

• Risk-return relationship for optimal portfolios
• Tangency portfolio representation
• Graphical visualization of CML

3. CML Data Sheet

• Data points for:
  • Risk
  • Return
• Used for plotting the Capital Market Line

Methodology

The model applies modern portfolio theory to evaluate diversification benefits and optimize asset allocation.

Key Concepts

• Efficient Frontier
• Risk vs Return trade-off
• Sharpe Ratio
• Capital Market Line (CML)

Use Cases

• Portfolio optimization
• Investment decision analysis
• Financial modeling practice

Tools

• Microsoft Excel

Notes

This model is a simplified implementation of portfolio theory concepts used in asset management and quantitative finance.# efficient-frontier-cml-excel Portfolio optimization model in Excel including Efficient Frontier, Sharpe ratio, and Capital Market Line (CML).