efficient frontier

The efficient frontier graph correlates a portfolio's risk profile to possible returns. The curve, or frontier, illustrates the possibility for risk and return. The lower-left hand corner illustrates a low-risk & return portfolio. Moving pp along the curve, one enters higher risk territory, where investors may expect higher returns.


Beyond the curve reflects returns impossible under current conditions. Below the curve reflects and inefficient portfolio, that may achieve greater returns in a different portfolio arrangement, with the same risk.