Exercise 02 We are going to consider the following stock portfolios. This time we want to see what pair of stocks gives us the best portfolio and we need to include correlation. Find the average rate of return and volatility (standard deviation) for the 3 portfolios given below the stock summaries: WNX ESSN VLT AVERAGE RATE OF RETURN 3.2% 4.8% 3.6% STANDARD DEVIATION 1.8% 3.2% 3.7% PORTFOLIO 1: 50% each of WNX and ESSN, the correlation between these stocks is 0.4 PORTFOLIO 2: 50% each of WNX and VLT, the correlation between these stock is -0.6 PORTFOLIO 3: 50% each of ESSN and VLT, the correlation between these stocks is -0.3 Which portfolio do you prefer? Explain using expected rate of return and volatility