Modern Portfolio Theory - ARK Innovation
This demonstration shows how ClearLedger optimizes a real portfolio using Modern Portfolio Theory.
Download Spreadsheet
You can download the exact ClearLedger export used in this demonstration:
About This Demo
This ClearLedger export shows how your portfolio’s return and risk profile changes when its weights are optimized using Modern Portfolio Theory (MPT). ClearLedger does not select stocks or make predictions. It simply takes the positions you already own and determines the most efficient mix of those holdings.
ClearLedger is a quantitative optimization tool. It improves your portfolio by adjusting weights, not by choosing securities. It applies Modern Portfolio Theory to increase expected return, reduce risk, or improve both simultaneously.
Buy / Hold / Sell Signals
These signals do not mean buy or sell the stock. They are weight-adjustment signals used to move your portfolio toward the efficient frontier.
How ClearLedger Performs ARK Innovation Optimization
ClearLedger evaluates an ARK-style high-volatility portfolio using a covariance matrix built from a shorter time horizon. High-growth, innovation-focused holdings typically exhibit elevated variance and strong correlation clustering, which can amplify total portfolio risk. Rather than predicting future prices, ClearLedger analyzes historical return relationships to determine the most efficient combination of weights.
The optimizer constructs the efficient frontier by solving a constrained quadratic optimization problem. Weight limits, diversification rules, and risk-adjusted efficiency targets ensure the optimized portfolio remains realistic even when dealing with high-beta, momentum-driven securities. Because ARK-style portfolios often contain concentrated positions in correlated innovation sectors, ClearLedger frequently reduces overweight positions in highly correlated holdings while increasing exposure to lower-correlation components.
This rebalancing effect is what drives the dramatic improvement in expected return, volatility, Sharpe ratio, alpha, beta, and correlation shown in the Technical Summary. ClearLedger focuses on improving the total portfolio, not individual stocks, which is why every metric shifts simultaneously after optimization.
Total Portfolio Technical Summary
The Technicals table in the spreadsheet is the most important part of the entire export. It shows how the portfolio as a whole behaves today versus how it behaves after optimization.
Expected Return
The portfolio’s expected return increases from 16.2% to 108.8%.
Risk
Total portfolio risk decreases from 37.97% to 28.67%.
Sharpe Ratio
The Sharpe ratio improves from 0.285 to 3.458.
Alpha
Portfolio alpha increases from -0.383 to 0.476.
Beta
Portfolio beta decreases from 2.322 to 1.748.
Correlation
Overall correlation improves from 0.465 to 0.427.
Actual vs Expected Return
Actual vs Expected Return increases from 4.21% to 51.11%.
Benchmark Comparison
The portfolio’s benchmark gap improves from -5.72 to 41.18.
Every metric in the Technicals table improves because the optimizer focuses on the total portfolio — not individual stocks.