Exercise 5 Your financially unsophisticated friend has invested all of his $10,000 savings into Apple stocks. He recently heard of a concept called diversification that might help him reduce the risk of his investment. He is considering selling $2,000 of Apple stocks and investing this amount into stocks of Allstate. As he is unsure about the risk implications of this move, he asks you to determine the fraction by which he could reduce his total return volatility if he indeed rearranged his investments. To answer your friend's question, you pull return data from Yahoo Finance and find that Apple exhibits a (monthly) return volatility of 0.076, that Allstate exhibits a (monthly) return volatility of 0.047, and that the return covariance between Apple and Allstate is 0.0016