how is the expected value of a stock used in portfolio theory 
modern portfolio theory and related models use mean variance optimization to come up with the best portfolio allocation on a risk adjusted basis risk is measured as the portfolio s standard deviation and the mean is the expected value expected return of the portfolio this does utilize the concepts presented in this article the bottom lineunderstanding the concept of expected value is important for investors it can aid them in determining the level of return that they might expect from an investment expected value and scenario analysis can provide insight into the risk of an investment versus its return and help an investor decide whether or not to include it in their portfolio 