LMM Labs adopts modern portfolio theory (MPT) to build well-diversified and optimized portfolios. Covariance, correlation, the Capital Asset Pricing Model (CAPM), the Security Market Line (SML), and the Sharpe ratio, along with other quantitative methods, will be utilized to assess portfolios. The intent here is not to take sides in the passive versus active portfolio management debate but to use cutting-edge techniques and algorithms to reduce risk and maximize return. The core belief is that it is possible to find significant alpha and to beat the market over defined time intervals, if not necessarily in the long run. This is in line with LMM Labs’ goal of using machine learning algorithms in the financial vertical.