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I have few questions, please answer
Q1- I have entered daily data of 5 months of 24 stocks. Can you please guide me about the rate what to input in Risk Free Rate & Target Rate. (Annual Intered Rate is 10%) I dont want to specify the target, I want to see how maximum i can take irrespective of specified target.
Q2- The result section shows the Avg period return while the target is already given. What does it means.. will appreciate if your interpret the result for me breifly.
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Thanks for the post here.
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Q1. The target rate is used for when using semi-deviation below this rate and probability of achieving it in the results. It has no impact on optimization otherwise so can be set freely such as 0%. The risk free rate should be what can be earned for the time period used, so if months, the 1 year government note rate divided by 12 is a good proxy.
Q2. The results show the optimized average monthly return and then the target is used under Monte Carlo simulation to calculate the probability of achieving it under the current and optimized portfolios.
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