Covariance Matrix in Mean-Variance Optimization

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3 Questions

In isolation forest, how are outliers identified?

Points with a shorter average path length than normal points

What is the main purpose of Density-Based Spatial Clustering?

Group closely packed points together

What is the importance of randomly selecting a subset of data in each isolation tree in isolation forests?

To prevent overfitting and increase robustness

Understand the significance of the covariance matrix in Mean-Variance Optimization (MVO) for investment portfolios. Learn how positive and negative correlations between assets impact diversification benefits in MVO strategies.

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