1. Based off the correlation matrix, please answer the following questions:
2. a. All other things being equal, which pair of stocks would reduce portfolio risk the most?
3. b. All other things being equal, which pair of stocks would reduce portfolio risk the least?
4. c.Identify and explain the two components of a linear relationship that correlation measures.

H HPQ HPQ PFE EPB TEVA PFE 1.0000 0.2186 0.0924 0.5127 -0.0722 Correlation matrix EPB TEVA 0.2186 0.0924 0.5127 1.0000 -0.0879 0.3572 -0.0879 1.0000 -0.2113 0.3572 -0.2113 1.0000 0.3682 0.1475 -0.0009 -0.0722 0.3682 0.1475 -0.0009 1.0000 14 10 Name Box 8 Month 7.5893% 10 4.7113% 11 3 -2.2572% 12 -12.1654% 13 -5.9698% 6.1977% 7 -18.0093% 9.1860% -0.0497% -0.2740% 0.5969% 8.1853% -4.6292% -6.0924% -1.4603% -7.6951% -2.3404% -3.4246% 19 - 30.0858% 20 -14.2518% 16.9669% 4.9234% 23 -7.7183% 8.2711% -10.0432% 26 -5.5129% 27 3.8329% 13 14 PFE 5.2121% -2.3197% -2.5084% -8.2888% -6.6040% 5.0672% 6.9779% 7.6757% 1.3915% -5.6198% 7.1780% 4.0005% 6.4984% 5.3657% 3.2194% 3.2180% -4.0389% -6.7669% -0.3313% -7.0456% 8.5279% 5.1511% 7.5253% -1.1103% -0.2430% 6.9090% 1.1289% EPB 7.2276% 7.4526% -1.7692% 2.0611% 3.8388% 10.6682% -0.5778% 2.3977% 6.2038% -1.7433% 0.9759% 5.0288% 8.2196% -3.9796% 3.4502% -7.4675% 1.0746% 2.5758% 4.4638% -3.6704% 4.7939% -1.7045% 5.5210% 2.8444% 4.2920% -4.9805% -1.4524% TEVA 5.9700% 4.9821% -7.1366% -6.5643% 5.3085% -6.2298% 3.9337% 4.1237% -1.6655% -3.2284% 4.0947% 4.7213% -8.2741% 0.1454% -9.2802% 11.1921% -5.4180% -3.3220% -11.4788% -10.5305% 9.3017% -2.5557% 1.8721% 11.1894% -0.1136% 0.5443% 1.5709% -3.5395% 2.4417% 2.7819% -2.0893% -6.0244% -0.4971% 0.0650% 1.6536% -0.4911% -1.2492% 3.6809% -1.5367% 7.0434% 0.7877% 5.9031% 0.2401% -2.9769% 0.8327% -1.8642% -2.0955% 1.8841% -8.8885% 2.8405% -2.1071% 6.3690% 2.4191% -5.8667% 15 16 18 21 22 24 25