Instructions: The goal is to attempt to create a diversified equities portfolio in two of the following different constraint conditions.
1. US portfolio (can only include US stocks):
- Think of diversification by sector in terms of correlation - i.e. what sectors benefit from oil price decline vs what sectors benefit from a rise in oil prices?
2. Sector your portfolio (pick a sector you are bullish on and only include stocks within that sector):
- Think of diversification in a more company-specific way - i.e. large cap vs small cap, growth vs value.
Justify your asset allocation:
- How are you mitigating risk within each context?
- What you are overweight vs underweight in each scenario?