Home MarketXLS
Dashboard MarketXLS
Screener MarketXLS
Options Profit Calculator MarketXLS
Stock Ranks MarketXLS
Spreadsheet Builder MarketXLS
Documentation MarketXLS
Logout MarketXLS

What is the Black Litterman Model and How Can You Use It?

Written by MarketXLS Team on 
Tue Jan 17 2023
 about MarketXLS
What is the Black Litterman Model and How Can You Use It? - MarketXLS
Boost your market advantage with MarketXLS. Real-time, enterprise-grade data. Book a demo or subscribe now!
What is the Black Litterman Model and How Can You Use It? - MarketXLS

What is the Black Litterman Model?

The Black Litterman Model is a risk-adjusted return optimization tool and asset allocation decision support system developed by Fischer Black and Robert Litterman in the early 1990s. It is considered a “polyhedral process” for portfolio optimization and provides insight into portfolio selection, risk management, and investment decisions. This model is based on the Mean-Variance Optimization technique and Mean-Variance Portfolio Theory but incorporates several additional features such as Bayesian Estimation and Expectations-Based Modeling to provide more robust and accurate portfolio optimization.

How Can You Use It?

The Black Litterman Model can be used for portfolio optimization, risk management, asset allocation, and return optimization. The core of the model is based on the concept of Equilibrium Prices for each risk factor, which are influenced by investors’ opinion, sentiment and risk appetite, rather than just relying on historical returns and past data. The model also leverages a novel Bayesian estimation technique to create a fully integrated “expectations-based” approach to portfolio optimization and investment decision making, allowing you to take into account the investors’ outlook and current market conditions.

One of the major advantages of the Black Litterman model is its ability to incorporate both subjective views and objective data while simultaneously minimizing risk, ensuring that allocations adhere to the investors’ risk preferences. This can significantly improve the overall performance of a given portfolio and provide greater insights into the risk-reward profile of investments.

The Black Litterman Model can be used to evaluate and allocate both actively managed and passively managed portfolios, as well as providing insight into mitigation strategies for potential investment risks.

MarketXLS

MarketXLS is a powerful Excel-based software program for investment decision support and portfolio optimization. It includes a Black Litterman Model feature that makes it easy to incorporate subjective views and objective data into your portfolio optimization methodology, allowing you to obtain more accurate and reliable risk-adjusted returns. With MarketXLS, you can easily track portfolio performance, measure risk levels, and create asset allocation strategies that are tailored to your investment objectives.

Overall, the Black Litterman model is a powerful tool for portfolio optimization, risk management, asset allocation, and return optimization. With MarketXLS, you can accurately integrate both subjective and objective data into your portfolio decision making process and create sophisticated portfolios that are tailored to your investment goals. Get started with MarketXLS’ Black Litterman Model today!

Here are some templates that you can use to create your own models

Search for all Templates here: https://marketxls.com/templates/

Relevant blogs that you can read to learn more about the topic

Black-Litterman Model- Portfolio Allocation And Optimization
Master Asset Allocation with the Help of Calculators

Interested in building, analyzing and managing Portfolios in Excel?
Download our Free Portfolio Template
I agree to the MarketXLS Terms and Conditions
Call: 1-877-778-8358
Ankur Mohan MarketXLS
Welcome! I'm Ankur, the founder and CEO of MarketXLS. With more than ten years of experience, I have assisted over 2,500 customers in developing personalized investment research strategies and monitoring systems using Excel.

I invite you to book a demo with me or my team to save time, enhance your investment research, and streamline your workflows.
Implement “your own” investment strategies in Excel with thousands of MarketXLS functions and templates.

We respect your privacy and will never share your email.
MarketXLS is a complete Excel stock solution

Kevin Hsu

StockKevin.com

I have used lots of stock and option information services. This is the only one which gives me what I need inside Excel

Lloyd Lenase

Option Day Trader

MarketXLS is a data junkie’s dream. It gives me the flexibility to mine for hidden treasures.

Dave

Swing trader since 2011

I like to access historical closing prices on a particular date. That makes tracking performance easy.

Patrick Cusatis, Ph.D., CFA

Associate Professor of Finance - Penn State University

Get Access to 1 Billion Usable Market data points IN YOUR EXCEL SHEETS WITH EASY TO USE EXCEL FUNCTIONS

Get started today

🎉 Exciting news! 🎉

You are invited to join our Discord Channel.

Interact, learn, and grow with experts in the markets!

Join our Discord