. A portfolio is composed of two stocks, A and B. Stock A has a standard deviation of return of 25% while stock B has a standard deviation of return of 50%. The covariance between the returns on A and B is -0.0625. Investor would like to invest at ratio of 3:1, which means that the proportion of funds invested in A is three times the proportion of funds invested in B.

What is the standard deviation of this portfolio? Does this portfolio provide diversification? Please explain your answers.