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Advancing Portfolio Optimization: Adaptive Minimum-Variance Portfolios and Minimum Risk Rate Frameworks

Ayush Jha, Abootaleb Shirvani, Ali Jaffri, Svetlozar T. Rachev, Frank J. Fabozzi

arXiv 27 Jan 2025 · Econometrics · 1 citations (OpenAlex)

arXiv:2501.15793 · PDF · DOI · OpenAlex · Extracted main text

Abstract

This study presents the Adaptive Minimum-Variance Portfolio (AMVP) framework and the Adaptive Minimum-Risk Rate (AMRR) metric, innovative tools designed to optimize portfolios dynamically in volatile and nonstationary financial markets. Unlike traditional minimum-variance approaches, the AMVP framework incorporates real-time adaptability through advanced econometric models, including ARFIMA-FIGARCH processes and non-Gaussian innovations. Empirical applications on cryptocurrency and equity markets demonstrate the proposed framework's superior performance in risk reduction and portfolio stability, particularly during periods of structural market breaks and heightened volatility. The findings highlight the practical implications of using the AMVP and AMRR methodologies to address modern investment challenges, offering actionable insights for portfolio managers navigating uncertain and rapidly changing market conditions.

Citation extraction

29
references
34
in-text mentions
29
distinct cited
4
self-citations
11,996
main-text words

appendix boundary found by appendix_command · 83% of the source is main text. Read the extracted text to check this.

Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Black, F (1972) Capital market equilibrium with restricted borrowing0.73732100%
2Adrian, T., Crump, R. K., and Moench, E (2013) Pricing the term structure with linear regressions0.64422100%
3Hansen, L. P. and Jagannathan, R (1991) Implications of security market data for models of dynamic economies0.64422100%
4Krishnamurthy, A. and Vissing-Jorgensen, A (2012) The aggregate demand for treasury debt0.51121100%
5Acharya, V. V. and Pedersen, L. H (2005) Asset pricing with liquidity risk0.40511100%
6Allingham, M (1991) Existence theorems in the capital asset pricing model0.40511100%
7Caballero, R. J. and Simsek, A (2021) A model of endogenous risk intolerance and lsaps: Asset prices and aggregate demand in a covid-19 shock0.40511100%
8Fama, E (1971) Risk, return, and equilibrium0.40511100%
9Gorton, G., Lewellen, S., and Metrick, A (2012) The safe-asset share0.40511100%
10Konno, H. and Shirakawa, H (1995) Existence of a non-negative equilibrium price vector in the mean-variance capital market0.40511100%

Showing the top 10 of 29 scored citations.