Citation:

Hind Salman Elias Al-Tai. "The Role of Diversification in Building an Optimal Investment Portfolio According to the Markowitz Model: An Applied Study on a Number of Iraqi Companies Listed on the Iraqi Stock Exchange for the Period (2018-2022)" International Research Journal of Economics and Management Studies, Vol. 3, No. 9, pp. 1-7, 2024.

Abstract:

This study aims to show how it is possible to build a diversified investment portfolio according to the Markowitz model and how the returns of these companies affect the calculation of the correlation coefficient on which the portfolio is built. To achieve this, the study sample was selected from 12 companies for the time period (2018-2022). It relied on financial and statistical analysis using some statistical tools such as the mean, standard deviation, correlation coefficient, and other tools such as Excel and Eviews10, which were based on the monthly reports issued by the Iraqi Stock Exchange. The study concluded that the negative correlation between the returns of shares of companies is the best in forming the optimal investment portfolio to achieve the maximum possible benefit from diversification compared to companies with positive correlation coefficients. Therefore, investors should pay attention to diversification when forming an investment portfolio, and this diversification should be deliberate and not random.

References:

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Keywords:

Investment Diversification, Markowitz, Return and Risk.