Stock A has a volatility of 29% and a correlation of 29% with your current portfolio. Stock

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Stock A has a volatility of 29% and a correlation of 29% with your current portfolio. Stock B has a volatility of 44% and a correlation of 33% with your current portfolio. You currently hold both stocks. Which will increase the volatility of your portfolio: (i) selling a small amount of stock B and investing the proceeds in stock A, or (ii) selling a small amount of stock A and investing the proceeds in stock B?

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Corporate Finance The Core

ISBN: 9781292431611

5th Global Edition

Authors: Jonathan Berk, Peter DeMarzo

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