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Based on the following information, Stock Weights St. Deviation Coeff. Correlation KO 73% 3% PEP (1 - weight of KO) 12% -0.27 WMT (1 -

Based on the following information,

Stock Weights St. Deviation Coeff. Correlation
KO 73% 3%
PEP (1 - weight of KO) 12% -0.27
WMT (1 - weight of KO) 10% 0.88

Currently, you are holding a portfolio comprised by KO and PEP shares (73% in KO). Your advisor suggests you should change to a portfolio comprised by KO and WMT instead (73% in KO). In this way, you would achieve a lower risk.

Do you accept this recommendation?

Type 0 as your solution if you do not accept (Your current portfolio has a lower risk than the new one)

Type 0.001 as your solution if you accept (The new portfolio would indeed result in a lower risk)

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