About Modern Portfolio Theory (MPT):
Modern Portfolio Theory, developed by Harry Markowitz, is an investment theory that seeks to maximize portfolio expected return for a given amount of market risk, or equivalently minimize risk for a given level of expected return, by carefully choosing proportions of various assets. MPT emphasizes diversification and the relationships (correlations) between assets to achieve an optimal risk-return tradeoff. The "efficient frontier" represents the set of optimal portfolios that offer the highest expected return for a defined level of risk.
