# Minimum Variance Portfolio

*Risk & Portfolio — Finicade finance glossary*

The minimum variance portfolio is the combination of assets with the lowest possible volatility — the leftmost point of the efficient frontier. It needs only the covariance matrix, not expected returns, which is its practical advantage: expected returns are estimated with enormous error and covariances far less so. That robustness explains why minimum-variance strategies often beat theoretically optimal mean-variance ones out of sample.

**Also known as:** min var portfolio, global minimum variance

**Related terms:** [Efficient Frontier](https://finicade.com/glossary/efficient-frontier), [Portfolio Variance](https://finicade.com/glossary/portfolio-variance), [Covariance](https://finicade.com/glossary/covariance), [Diversification](https://finicade.com/glossary/diversification), [Capital Market Line](https://finicade.com/glossary/capital-market-line)

Source: https://finicade.com/glossary/minimum-variance-portfolio