Question
c. Calculate the standard deviation of annual returns for AMZN, BUD, and the equally weighted portfolio of AMZN and BUD. d. Calculate the correlation coefficient
c. Calculate the standard deviation of annual returns for AMZN, BUD, and the equally weighted portfolio of AMZN and BUD.
d. Calculate the correlation coefficient for AMZN and BUD annual returns.
e. Create a table in Excel that calculates returns for portfolios comprised of AMZN and BUD using the following, respective, weightings: (1.0, 0.0), (0.9, 0.1), (0.8, 0.2), (0.7, 0.3), (0.6, 0.4), (0.5,0.5), (0.4, 0.6), (0.3, 0.7), (0.2, 0.8), (0.1, 0.9), and (0.0, 1.0). Also, calculate the portfolio standard deviation associated with each portfolio composition. You will need to use the standard deviations found previously for AMZN and BUD and their correlation coefficient.
Year | Weight (A) | Amazon.com, Inc. (AMZN) | Weight (B) | Anheuser-Busch InBev SA/NV (BUD) |
2010 | 1 | 0.3527 | 0 | 0.1228 |
2011 | 0.9 | 0.1462 | 0.1 | 0.1203 |
2012 | 0.8 | 0.3655 | 0.2 | 0.4898 |
2013 | 0.7 | 0.3510 | 0.3 | 0.1158 |
2014 | 0.6 | -0.0116 | 0.4 | 0.3113 |
2015 | 0.5 | 0.6557 | 0.5 | 0.0648 |
2016 | 0.4 | 0.5294 | 0.6 | 0.0161 |
2017 | 0.3 | 0.7619 | 0.7 | 0.1269 |
2018 | 0.2 | 0.1846 | 0.8 | -0.3010 |
2019 | 0.1 | 0.1687 | 0.9 | 0.0090 |
2020 | 0 | 0.5961 | 1 | -0.1595 |
Step by Step Solution
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Step: 1
To answer the given questions we first need to calculate the annual returns for AMZN and BUD using the provided data a Calculate the annual returns for AMZN and BUD using the following formula Annual ...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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