E(1 s) 10 Investment Opportunity set for stocks and bonds with varios correlation coeffients SD S 19 Weight in stocks WS -0.1 0.0 0.1 0.2 0.3 0.4 0.6 0.8 1.0 1.1 E(1 B) 5 Portfolio expected return ws(min) = (0^2 - SP) / (0^2 + B^2 - 2*0) = E(rp) = ws(min)*E(rs)+(1-ws(min))*E(rb) = SDp = SDB 8 Portfolio Standard Deviation for Given Correlation -1 0 0.2 Minimum Variance Portfolio 0.5 1