Markowitz and Naive Approaches to Portfolio Analysis (An Empirical Analysis of Some Selected Securities Quoted on the Nigerian Stock Exchange).

Abstract

This study empirically investigated Markowitz and naïve approaches to portfolio analysis. Three research hypotheses were tested using mean, variance and standard deviation which were applied on the data gathered from the listed active companies in the Nigerian stock exchange over a ten (10) years period. The outcome of the analysis carried out using the SPSS software established that there is no significant difference between the relational estimates of the risk and return parameters of both the Markowitz and the Naïve diversification approaches to portfolio analysis. Based on the findings, the researcher recommended amongst others that; Investors should diversify their investment by using the Naive diversification strategy in order to minimize risk and maximize returns; more sophisticated investors could adopt Markowitz strategy if they possess the skills to do so.

Keywords: Markowitz Diversification; Naïve Diversification; Risks and Returns; portfolio Analysis; Nigeria

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