Consider the characteristics of the following three stocks:

The correlation between Thumb Devices and Air Comfort is 0.12. The correlation between Thumb Devices and Sport Garb is 0.89. The correlation between Air Comfort and Sport Garb is 0.85. If you can pick only two stocks for your portfolio, which two stocks should be included in your portfolio to eliminate the most risk? Why?

Multiple Choice

A) Combine Thumb Devices and Sport Garb because Thumb Devices has the highest return and Sport Garb has the lowest standard deviation.

B) Combine Air Comfort and Sport Garb due to negative correlation.

C) Combine Thumb Devices and Air Comfort because of high standard deviations.

D) Combine Thumb Devices and Sport Garb because they have a high correlation.

A Consider the characteristics of the following three stoc Expected Return 13% Standard Deviation 23% 19 Thumb Devices Air Comfort Sport Garb 10 10 17 The