FINA$6319$: Empirical analysis $$ Portfolio risk & return and ORP

$($Extra $1$ point for overall grade$)$

Try your best; this is a real$-$life application for what we learned.

Download the monthly historical stock price data of two firms for the past year from Yahoo finance or other public platforms.

Answering following questions:

Using those data to estimate the stock$$s return and volatility, respectively.

Hint: return of stock i on time t: rt $=($P$\_$t$-$P$\_($t$-1))/$P$\_($t$-1),$ where P is the stock price.

And given the weight you want for each stock to find monthly portfolio return, estimating your portfolio$$s return and volatility.

Hint: return of portfolio on time t: rp$,$t $=$weight in stock i$*$ ri$,$t

What$$s the correlation b$/$w your two stocks.

What$$s relation between weighted average of stock$$s two elements and your portfolio$$s ones.

Use the average $1-$year US T$-$bill yield from the Department of US Treasury is $4\%.$

What$$s your current portfolio$$s sharp ratio.

What$$s your optimal risky portfolio.

Upload the EXCEL worksheet and your explanation or other work that you think helps.

You could refer the example that I upload.

$*$Excel formula you might need:

Average: $=$ AVERAGE $($:$)$

Standard deviation: $=$ STDEV.P$($:$)$

Square root: $=$ SQRT $($:$)$

Correlation: CORREL $($:$)$

$*$Excel DATA analysis tool you might need:

Solver: set weight in stock $1,$ let weight in stock $2=1-$ weight in stock i$.$

Use $$solver$$ to maximize your Sharpe ratio by change weight in stock $1$