Consider the monthly returns for Ford and General Motors stock given below. Were there advantages to diversifying between these two stocks? Explain.

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A B C MONTHLY RETURNS FOR FORD AND GM STOCK 2 123456780 1 Date Ford GM 3 1-Dec-99 5.52% -1.50% 4 3-Jan-00 -5.70% 10.83% 5 1-Feb-00 -16.32% -4.99% 6 1-Mar-00 10.32% 8.89% 3-Apr-00 20.27% 13.05% 8 1-May-00 -11.30% -24.12% 9 1-Jun-00 -7.81% -17.79% 10 3-Jul-00 9.47% -1.94% 11 1-Aug-00 -9.18% 23.95% 12 1-Sep-00 5.42% -7.14% 13 2-Oct-00 3.63% -4.43% 14 1-Nov-00 -12.89% -19.61% 15 1-Dec-00 3.02% 2.89% 16 2-Jan-01 21.56% 5.43% 17 1-Feb-01 -3.29% 4.56% 18 19 Average 0.85% -0.79% 20 Standard deviation. 11.23% 12.58% 21 Correlation 0.4056