{"id":44607,"date":"2025-07-19T12:35:59","date_gmt":"2025-07-19T12:35:59","guid":{"rendered":"https:\/\/www.writemyessays.app\/blog\/questions\/a-comparative-analysis-of-portfolio-construction-via-llm-based-investment-models-and-modern-portfolio-theory-2\/"},"modified":"2025-07-19T12:35:59","modified_gmt":"2025-07-19T12:35:59","slug":"a-comparative-analysis-of-portfolio-construction-via-llm-based-investment-models-and-modern-portfolio-theory-2","status":"publish","type":"questions","link":"https:\/\/www.writemyessays.app\/blog\/questions\/a-comparative-analysis-of-portfolio-construction-via-llm-based-investment-models-and-modern-portfolio-theory-2\/","title":{"rendered":"A Comparative Analysis of Portfolio Construction via LLM-Based Investment Models and Modern Portfolio Theory"},"content":{"rendered":"<p><strong>Fintech final research project<\/strong>. The study explores how <strong>financially inexperienced investors<\/strong> can construct diversified and risk-managed stock portfolios using <strong>Large Language Models (LLMs)<\/strong> like ChatGPT, without relying on traditional financial theories such as Modern Portfolio Theory (MPT).<\/p>\n<p>The research includes a <strong>comparative simulation<\/strong> of three portfolios:<\/p>\n<ol>\n<li><strong>Portfolio 1 \u2013 Vague Prompt<\/strong>:<\/li>\n<li> Generated by ChatGPT with a general natural language input (e.g., &#8220;I have \u20ac1,000 to invest, give me a portfolio&#8221;).<\/li>\n<li><strong>Portfolio 2 \u2013 Technical Prompt<\/strong>:<\/li>\n<li> A second ChatGPT-generated portfolio based on a refined, risk-conscious prompt that specifies a short-term investment horizon and moderately aggressive risk tolerance.<\/li>\n<li><strong>Portfolio 3 \u2013 Human\/MPT-Based Portfolio<\/strong>:<\/li>\n<li> Constructed manually by the researchers using historical performance data, applying MPT principles to create an efficient frontier\u2013based, diversified portfolio.<\/li>\n<\/ol>\n<h3>? <strong>Tools &amp; Methodology<\/strong>:<\/h3>\n<ul>\n<li>All portfolios were built in <strong>Google Colab<\/strong> using <strong>Python<\/strong>.<\/li>\n<li>Financial data was gathered via the <strong>Yahoo Finance API<\/strong> (yfinance).<\/li>\n<li>Evaluation metrics include:<\/li>\n<li><strong>Sharpe Ratio<\/strong><\/li>\n<li><strong>Correlation and Covariance Matrices<\/strong><\/li>\n<li><strong>Alpha, Beta<\/strong><\/li>\n<li><strong>Risk-Return plots<\/strong><\/li>\n<li>Portfolio weights and asset behavior over time<\/li>\n<li>:<\/li>\n<\/ul>\n<p>The goal is to <strong>compare diversification and risk, <\/strong>across the three portfolios, and understand <strong>how LLMs behave when faced with vague vs. technical investment prompts<\/strong>, as well as how their outputs compare to a human-built MPT portfolio.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Fintech final research project. The study explores how financially inexperienced investors can construct diversified and risk-managed stock portfolios using Large Language Models (LLMs) like ChatGPT, without relying on traditional financial theories such as Modern Portfolio Theory (MPT). The research includes a comparative simulation of three portfolios: Portfolio 1 \u2013 Vague Prompt: Generated by ChatGPT with [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","template":"","meta":[],"disciplines":[128],"paper_types":[],"tagged":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.writemyessays.app\/blog\/wp-json\/wp\/v2\/questions\/44607"}],"collection":[{"href":"https:\/\/www.writemyessays.app\/blog\/wp-json\/wp\/v2\/questions"}],"about":[{"href":"https:\/\/www.writemyessays.app\/blog\/wp-json\/wp\/v2\/types\/questions"}],"author":[{"embeddable":true,"href":"https:\/\/www.writemyessays.app\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.writemyessays.app\/blog\/wp-json\/wp\/v2\/comments?post=44607"}],"version-history":[{"count":0,"href":"https:\/\/www.writemyessays.app\/blog\/wp-json\/wp\/v2\/questions\/44607\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.writemyessays.app\/blog\/wp-json\/wp\/v2\/media?parent=44607"}],"wp:term":[{"taxonomy":"disciplines","embeddable":true,"href":"https:\/\/www.writemyessays.app\/blog\/wp-json\/wp\/v2\/disciplines?post=44607"},{"taxonomy":"paper_types","embeddable":true,"href":"https:\/\/www.writemyessays.app\/blog\/wp-json\/wp\/v2\/paper_types?post=44607"},{"taxonomy":"tagged","embeddable":true,"href":"https:\/\/www.writemyessays.app\/blog\/wp-json\/wp\/v2\/tagged?post=44607"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}