Black Litterman Model

Black-Litterman Model Implementation

This repository contains a comprehensive implementation of the Black-Litterman Model, a financial portfolio optimization framework. The model integrates market equilibrium with subjective investor views, offering a robust and practical approach to constructing diversified portfolios.

Features

• Implied Equilibrium Returns Calculation: Compute the equilibrium returns based on market capitalization weights.
• Integration of Investor Views: Incorporate absolute and relative views into the model to adjust the equilibrium returns.
• Black-Litterman Expected Returns: Derive adjusted returns combining equilibrium and investor views.
• Mean-Variance Optimization (MVO): Optimize portfolio weights using the adjusted returns.
• Visualization: Graphical representation of portfolio weights and expected returns.

How to Use

Prerequisites

1. Python 3.8 or higher.
2. Install required libraries:

   pip install -r requirements.txt