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Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable representing annual percent return for the Vanguard Total Stock

Do bonds reduce the overall risk of an investment portfolio? Letxbe a random variable representing annual percent return for the Vanguard Total Stock Index (all Stocks). Letybe a random variable representing annual return for the Vanguard Balanced Index (60% stock and 40% bond). For the past several years, assume the following data. Computey2

x:

15

0

38

24

31

26

27

-15

-15

-24

y:

10

-3

27

18

25

18

18

-3

-4

-10

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