Advantages of using Financial Toolbox
• The Financial toolbox includes a set of portfolio construction and optimization functions designed to build an optimal portfolio that optimize risk adjusted return.
• MATLAB uses matrices for calculations. Storing of data is done in matrices and so it becomes easy and efficient to work in MATLAB.
• Writing MATLAB programs are easy and very much similar to C.
• There is a C++ compiler built in which can run already existing applications and programs in MATLAB.
• MATLAB enables user to import data from external files like spreadsheets. It is possible to download data from Bloomberg also. The downloading of data can be done in the form of matrices and then number crunching computation can be performed on them.
• It is possible to integrate CPLEX (a more efficient optimization package) to integrate with MATLAB.
All these features enable a financial analyst and portfolio manager to work in MATLAB. There are other in built functions in MATLAB for calculating yield of a bond, options and other valuations models which can make overall life of a financial analyst simpler. A financial analyst can perform a time-series analysis on a stock, he can check on the pricing of options and other derivatives. These features provide a common working platform for the financial analyst.
MATLAB provides lot of inbuilt functions for Portfolio Analysis and Optimization. A Portfolio Managers faces a lot of constraints while constructing the portfolio, to meet the objectives of the variety of investors. Regulations in the industry, different risk appetite of the investors etc. result in constraints that mathematically take the form or linear inequalities which can then be used to realize an optimal portfolio. ...