What is quantitative portfolio optimization?

Quantitative portfolio optimization is the process of using mathematical models and statistical techniques to construct investment portfolios that maximize expected returns for a given level of risk, or minimize risk for a given level of expected return. This approach relies on quantitative data analysis, such as historical prices, returns, and correlations between assets, to inform the portfolio construction process. Techniques like mean-variance optimization, factor models, and Monte Carlo simulations are commonly used. The goal is to systematically select asset weights that best align with an investor's financial objectives and risk tolerance.