You expect HGH stock to have a 20% return next year and a 45% volatility. You have
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You expect HGH stock to have a 20% return next year and a 45% volatility. You have $25,000 to invest, but plan to invest a total of $50,000 in HGH, raising the additional $25,000 by shorting either KBH or LWI stock. Both KBH and LWI have an expected return of 15% and a volatility of 35%. If KBH has a correlation of +0.9 with HGH, and LWI has a correlation of -0.90 with HGH, which stock should you short?
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Related Book For 
Corporate Finance The Core
ISBN: 9781292158334
4th Global Edition
Authors: Jonathan Berk, Peter DeMarzo
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