# Portfolio expected return and variance

A theory of portfolio analysis that considers relationships between asset movements as well as individual asset risks.

 Theory · Accounting and finance


## Core concepts
  Expected return: assumptions about future returns
 Variance and covariance: variability and the degree of movement together
 Efficient combinations: compare risk and expected-return alternatives
 

## Application
 When reviewing assets or exposures, examine concentration in common risk factors and the effects of estimation assumptions.


## Limitations and jurisdiction
 Historical correlations are not guaranteed to persist. Variance does not describe every risk, and diversification does not eliminate losses.


## Editorial perspectives
  Diversify risk: reduce concentrated exposure to particular factors.
 Seek returns: record additional risk and estimation uncertainty together.
 

## Sources
 Harry Markowitz · The Journal of Finance · 1952, DOI 10.1111/j.1540-6261.1952.tb01525.x
[Portfolio Selection](https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1540-6261.1952.tb01525.x) Context: General financial theory
 Source checked: 2026-10-07
 Independent editorial summary and source link; the original text is not republished.


## Related personas
  [Financial analyst](https://personawiki.app/en/personas/financial-analyst)

## Translation status
 Editorial English translation of the Korean edition. No professional translation or occupational expert review has been completed. Translation does not change the source jurisdiction.
 Translation prepared: 2026-10-09 · Source fingerprint: kb-0af7e924fa6c2688
[Korean source](https://personawiki.app/knowledge/portfolio-selection)

## API
[JSON document](https://personawiki.app/api/v1/knowledge/portfolio-selection?lang=en)