8.22 The following table lists the rates of return for 10 years on Chevron and Mobil (both energy firms) and on Sears and United States Steel (L'SX) (unrelated areas of business). Year Scars 1 47.8 2 3 -7.3 16.4 75.9 30.1 30.3 -22.9 43.5 4 Rate of Return (%) Chevron Mobil 74.9 53.7 -6.1 42.3 - 15.8 14.9 16.5 22.8 -0.4 7.4 27.3 19.3 26.7 37,3 -2.2 8.8 22.0 21.6 46.4 38.2 -7.5 S 6 7 8 -8.6 28.3 11.2 -3.7 8.0 4.5 45.3 4,9 25.2 9 27.1 10 -0.7 Assume the rates of return corresponding to each year have an equal possibility of 1/10 of reoccurring. Calculate the correlation and the portfolio variance when 24 = x= 1/3 for a portfolio consisting of: a Chevron and Mobil b. Sears and USX You can use excel for you calculations. Explain your results. 8.22 The following table lists the rates of return for 10 years on Chevron and Mobil (both energy firms) and on Sears and United States Steel (L'SX) (unrelated areas of business). Year Scars 1 47.8 2 3 -7.3 16.4 75.9 30.1 30.3 -22.9 43.5 4 Rate of Return (%) Chevron Mobil 74.9 53.7 -6.1 42.3 - 15.8 14.9 16.5 22.8 -0.4 7.4 27.3 19.3 26.7 37,3 -2.2 8.8 22.0 21.6 46.4 38.2 -7.5 S 6 7 8 -8.6 28.3 11.2 -3.7 8.0 4.5 45.3 4,9 25.2 9 27.1 10 -0.7 Assume the rates of return corresponding to each year have an equal possibility of 1/10 of reoccurring. Calculate the correlation and the portfolio variance when 24 = x= 1/3 for a portfolio consisting of: a Chevron and Mobil b. Sears and USX You can use excel for you calculations. Explain your results