If you look at the single period mean, it will not represent the portfolio return. That’s why the expectation of an RV in a single period is insufficient information for looking at the return, and why we want to reduce volatility, and preserve expected.
Exactly.
If you look at the single period mean, it will not represent the portfolio return. That’s why the expectation of an RV in a single period is insufficient information for looking at the return, and why we want to reduce volatility, and preserve expected.