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5. You wish to create a portfolio consisting of the stocks Coil Inc. and Amp Engines. You observe the following information about past returns:
5. You wish to create a portfolio consisting of the stocks Coil Inc. and Amp Engines. You observe the following information about past returns: Annual Returns 2018 Coil 5.26% Amp 4.84% 2019 2020 5.18% 16.49% 4.70% -4.45% Furthermore, your analysts have provided a preliminary report about the individual stock performance: Coil Amp E 5.05% 5.63% Volatility (g) 0.30% 10.49% You consider investing 89% in stock A and 11% in stock B. a) Compute the covariance and correlation between both stocks! b) Compute the expected return of this portfolio! c) Compute the expected volatility of this portfolio!
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