Logo Explanation

Each color in the graphs represents a certain type of asset. The relative size of each band of color represents the "weight" of that asset in the portfolio. The horizontal axes represent the efficient frontier. The composition of portfolios to the left of each graph has the minimum risk. The composition of portfolios to the right of each graph has the maximum expected return and a correspondingly higher risk. In short, the graphs display portfolios along the efficient frontier, from low to high risk, in terms of their portfolio weights.

The first graph, at left, displays the portfolio composition map of a classical efficient frontier portfolio optimization, based on a stock universe of roughly 500 stocks. Since there are no asset constraints (apart from non-negativity), the maximum expected return, or the right-most point in the graph, consists of one stock, which is represented by a column of the same color from bottom to top. This image does not change.

The center graph displays fifty resampled portfolio composition maps, made by entering the data used for the graph to the left into New Frontier’s Optimizer. Note how remarkably different some of the resampled portfolio composition maps are relative to the classical efficient frontier.

The third graph, at right, displays the average of the resampled efficient frontiers displayed in the center graph and is the image from which we take our logo. This process shows us that, even with the small amount of resampling shown here, the Optimizer provides a more stable portfolio composition map.