Quick Finance Tip – Portfolio Risk and Return On A Graph

Portfolio Risk and Return on a graph will help depict the tradeoff between both. Returns will be on the y-axis and Risk will be on the x-axis. The more to the right of the graph you move, the higher the risk, and the lower the utility. The more vertical you move up the graph, the higher the return, hence the higher the utility. Therefore, to generate the desired utility, if risk increases going right, then the higher returns going north must increase.