The Markowitz model, or the MPT (Modern Portfolio Theory), represents the mathematical formulation of risk diversification in investing, that aims at selecting a group of investment assets which have collectively lower risk than any single asset on its own. Thus, MPT shows how to choose a portfolio with the maximum possible expected return for the given amount of risk. It also describes how to choose a portfolio with the minimum possible risk for the given expected return. Therefore, Modern Portfolio Theory is viewed as a form of diversification which explains the way of finding the best possible diversification strategy.
