Lecture
This lecture covers the Portfolio Theory focusing on the Risk Parity Strategy, which involves asset allocation proportional to the inverse of volatility. It discusses the benefits of diversification, mean-variance analysis, optimal portfolios, and alternative diversified portfolios like Equal Weights and Market Weights. The instructor explains the mathematical characterization of the general case, the two-fund separation principle, and the properties of minimum-variance portfolios. The lecture also delves into the comparison of strategies such as Risk Parity, 60/40 Portfolio, and Market Portfolio, providing insights into historical performance and portfolio statistics.