Question
For a moment, assume the correlation between the two stocks equals exactly 1. Graph the investment opportunity set. (Hint: This does not require any additional
For a moment, assume the correlation between the two stocks equals exactly 1. Graph the investment opportunity set. (Hint: This does not require any additional excel work or calculations
MONTHSTOCK PRICESRETURNSTANDARD DEVIATION OF RETURNSVARIANCE OF RETURNSMSFTDISS&P 500MSFTDISS&P 500MSFTDISS&P 500MSFTDISS&P 50012/1/1125.9637.501257.601/1/1229.5338.901312.4113.75%3.73%4.36%6.02%4.93%3.07%36.23%24.26%9.45%2/1/1231.7441.991365.687.48%7.94%4.06%5.87%4.92%3.05%34.49%24.19%9.30%3/1/1232.2643.781408.471.64%4.26%3.13%5.87%4.89%3.05%34.49%23.96%9.29%4/1/1232.0243.111397.91-0.74%-1.53%-0.75%5.91%4.91%3.05%34.92%24.14%9.33%5/1/1229.1945.711310.33-8.84%6.03%-6.27%5.94%4.93%3.07%35.29%24.35%9.42%6/1/1230.5948.501362.164.80%6.10%3.96%5.86%4.94%2.98%34.33%24.37%8.90%7/1/1229.4749.141379.32-3.66%1.32%1.26%5.89%4.94%2.98%34.65%24.37%8.89%8/1/1230.8249.471406.584.58%0.67%1.98%5.89%4.97%3.00%34.72%24.69%9.01%9/1/1229.7652.281440.67-3.44%5.68%2.42%5.92%5.00%3.02%35.07%25.01%9.11%10/1/1228.5449.121412.16-4.10%-6.04%-1.98%5.93%5.01%3.03%35.18%25.07%9.19%11/1/1226.6249.661416.18-6.73%1.10%0.28%5.93%4.97%3.04%35.17%24.71%9.21%12/1/1226.7149.791426.190.34%0.26%0.71%5.88%5.00%3.06%34.62%25.04%9.33%1/1/1327.4553.881498.112.77%8.21%5.04%5.92%5.04%3.08%35.06%25.38%9.46%2/1/1327.8054.591514.681.28%1.32%1.11%5.96%5.00%3.06%35.55%25.04%9.34%3/1/1328.6156.801569.192.91%4.05%3.60%6.00%5.04%3.08%36.05%25.40%9.48%4/1/1333.1062.841597.5715.69%10.63%1.81%6.05%5.06%3.08%36.56%25.64%9.50%5/1/1334.9063.081630.745.44%0.38%2.08%5.86%4.97%3.10%34.31%24.66%9.62%6/1/1334.5463.151606.28-1.03%0.11%-1.50%5.88%5.00%3.12%34.62%25.02%9.73%7/1/1331.8464.651685.73-7.82%2.38%4.95%5.92%5.04%3.13%35.03%25.39%9.81%8/1/1333.4060.831632.974.90%-5.91%-3.13%5.84%5.07%3.11%34.12%25.75%9.68%9/1/1333.2864.491681.55-0.36%6.02%2.97%5.87%5.04%3.10%34.51%25.41%9.60%10/1/1335.4168.591756.546.40%6.36%4.46%5.91%5.04%3.11%34.98%25.41%9.67%11/1/1338.1370.541805.817.68%2.84%2.80%5.93%5.03%3.10%35.22%25.35%9.60%12/1/1337.4176.401848.36-1.89%8.31%2.36%5.94%5.07%3.11%35.23%25.70%9.67%1/1/1437.8472.611782.591.15%-4.96%-3.56%5.97%5.02%3.13%35.59%25.19%9.78%2/1/1438.3180.811859.451.24%11.29%4.31%6.02%5.01%3.11%36.19%25.06%9.66%3/1/1440.9980.071872.347.00%-0.92%0.69%6.07%4.86%3.10%36.80%23.57%9.59%4/1/1440.4079.341883.95-1.44%-0.91%0.62%6.08%4.89%3.12%36.98%23.94%9.75%5/1/1440.9484.011923.571.34%5.89%2.10%6.12%4.93%3.15%37.45%24.32%9.93%6/1/1441.7085.741960.231.86%2.06%1.91%6.17%4.93%3.17%38.13%24.27%10.06%7/1/1443.1685.881930.673.50%0.16%-1.51%6.23%4.97%3.20%38.84%24.68%10.22%8/1/1445.4389.882003.375.26%4.66%3.77%6.29%5.01%3.21%39.52%25.14%10.33%9/1/1446.3689.031972.292.05%-0.95%-1.55%6.33%5.03%3.21%40.04%25.30%10.33%10/1/1446.9591.382018.051.27%2.64%2.32%6.39%5.07%3.23%40.83%25.76%10.44%11/1/1447.8192.512067.561.83%1.24%2.45%6.45%5.12%3.25%41.64%26.18%10.59%12/1/1446.4594.192058.90-2.84%1.82%-0.42%6.52%5.17%3.27%42.49%26.71%10.72%1/1/1540.4090.961994.99-13.02%-3.43%-3.10%6.55%5.22%3.31%42.92%27.23%10.93%2/1/1543.85104.082104.508.54%14.42%5.49%6.25%5.24%3.30%39.03%27.47%10.89%3/1/1540.66104.892067.89-7.27%0.78%-1.74%6.24%4.88%3.25%38.98%23.80%10.58%4/1/1548.64108.722085.5119.63%3.65%0.85%6.15%4.93%3.27%37.88%24.32%10.71%5/1/1546.86110.372107.39-3.66%1.52%1.05%5.63%4.96%3.31%31.71%24.61%10.95%6/1/1544.15114.142063.11-5.78%3.42%-2.10%5.63%5.01%3.35%31.72%25.14%11.20%7/1/1546.70120.002103.845.78%5.13%1.97%5.57%5.05%3.36%31.02%25.47%11.30%8/1/1543.52101.881972.18-6.81%-15.10%-6.26%5.61%5.05%3.39%31.44%25.45%11.52%9/1/1544.26102.201920.031.70%0.31%-2.64%5.50%4.50%3.26%30.22%20.29%10.64%10/1/1552.64113.742079.3618.93%11.29%8.30%5.57%4.56%3.26%30.98%20.81%10.63%11/1/1554.35113.472080.413.25%-0.24%0.05%4.93%4.26%3.06%24.32%18.11%9.37%12/1/1555.48105.082043.942.08%-7.39%-1.75%4.99%4.31%3.10%24.92%18.59%9.62%1/1/1655.0995.821940.24-0.70%-8.81%-5.07%5.06%4.19%3.12%25.62%17.53%9.73%2/1/1650.8895.521932.23-7.64%-0.31%-0.41%5.11%3.95%3.01%26.16%15.63%9.05%3/1/1655.2399.312059.748.55%3.97%6.60%4.92%4.01%3.05%24.18%16.07%9.28%4/1/1649.87103.262065.30-9.70%3.98%0.27%4.86%4.02%2.92%23.64%16.19%8.52%5/1/1653.0099.222096.956.28%-3.91%1.53%4.47%4.04%2.96%19.99%16.28%8.78%6/1/1651.1797.822098.86-3.45%-1.41%0.09%4.48%4.03%3.01%20.11%16.22%9.03%7/1/1656.6895.952173.6010.77%-1.91%3.56%4.44%4.08%3.05%19.68%16.64%9.33%8/1/1657.4694.462170.951.38%-1.55%-0.12%4.23%4.12%3.06%17.86%17.01%9.35%9/1/1657.6092.862168.270.24%-1.69%-0.12%4.30%4.18%3.11%18.48%17.45%9.66%10/1/1659.9292.692126.154.03%-0.18%-1.94%4.36%4.23%3.16%19.02%17.88%10.00%11/1/1660.2699.122198.810.57%6.94%3.42%4.43%4.31%3.18%19.62%18.54%10.13%12/1/1662.14104.222238.833.12%5.15%1.82%4.51%4.21%3.20%20.31%17.70%10.23%1/1/1764.65110.652278.874.04%6.17%1.79%4.60%4.18%3.25%21.11%17.51%10.59%2/1/1763.98110.092363.64-1.04%-0.51%3.72%4.68%4.09%3.31%21.87%16.73%10.98%3/1/1765.86113.392362.722.94%3.00%-0.04%4.73%4.18%3.31%22.41%17.48%10.98%4/1/1768.46115.602384.203.95%1.95%0.91%4.84%4.23%3.39%23.45%17.90%11.49%5/1/1769.84107.942411.802.02%-6.63%1.16%4.95%4.31%3.47%24.46%18.59%12.05%6/1/1768.93106.252423.41-1.30%-1.57%0.48%5.07%4.15%3.56%25.74%17.22%12.65%7/1/1772.70109.932470.305.47%3.46%1.93%5.15%4.24%3.65%26.49%17.98%13.35%8/1/1774.77101.202471.652.85%-7.94%0.05%5.24%4.29%3.74%27.42%18.43%13.97%9/1/1774.4998.572519.36-0.37%-2.60%1.93%5.39%3.91%3.85%29.10%15.25%14.84%10/1/1783.1897.812575.2611.67%-0.77%2.22%5.53%3.94%3.95%30.62%15.53%15.62%11/1/1784.17104.822584.841.19%7.17%0.37%5.10%4.06%4.05%26.00%16.44%16.39%12/1/1785.54107.512673.611.63%2.57%3.43%5.29%3.81%4.20%27.98%14.51%17.64%1/1/1895.01108.672823.8111.07%1.08%5.62%5.51%3.92%4.24%30.32%15.33%18.01%2/1/1893.77103.162713.83-1.31%-5.07%-3.89%4.93%4.08%4.02%24.26%16.67%16.14%3/1/1891.27100.442640.87-2.67%-2.64%-2.69%5.12%3.90%4.09%26.19%15.23%16.74%4/1/1893.52100.332648.052.47%-0.11%0.27%5.24%3.94%4.25%27.44%15.51%18.05%5/1/1898.8499.472705.275.69%-0.86%2.16%5.54%4.15%4.50%30.71%17.25%20.25%6/1/1898.61104.812718.37-0.23%5.37%0.48%5.65%4.36%4.70%31.95%19.02%22.07%7/1/18106.08113.562816.297.58%8.35%3.60%6.09%4.40%5.05%37.11%19.32%25.47%8/1/18112.33112.022901.525.89%-1.36%3.03%5.83%3.22%5.08%33.95%10.34%25.80%9/1/18114.37116.942913.981.82%4.39%0.43%5.57%3.55%5.06%31.01%12.59%25.64%10/1/18106.81114.832711.74-6.61%-1.80%-6.94%6.06%2.90%5.51%36.73%8.39%30.35%11/1/18110.89115.492760.173.82%0.57%1.79%6.56%3.52%6.08%42.97%12.36%37.00%12/1/18101.57109.652506.85-8.40%-5.06%-9.18%7.22%4.57%7.11%52.19%20.88%50.49%AVERAGE54.4287.382039.171.81%1.41%0.87%5.60%4.56%3.47%31.74%21.06%12.56%COVARIANCE9.621677147CORRELATION32.85%
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