Go to finance.yahoo.com and obtain the daily returns for GE, AAPL, MSFT, and WMT over the year 10/09/2015 to 10/09/2016. You will find the daily adjusted closing

prices in the Historical Prices section. Use the daily adjusted closing prices to calculate daily returns. Note: The adjusted closing prices already incorporate all dividend payout, so you will not need to find the dividend information to calculate the returns. That is, the capital gain yield based on adjusted closing prices is equal to the return. Merge the returns for these firms into a single Excel workbook with the returns for each company properly aligned.

1.Using the Excel functions for Averageand Standard Deviation,calculate theaverage return and standard deviation for each of the firms and using the Correlation function, construct the correlation matrix for the firms using the daily returns for the entire period. State which pair of firms has the highest and lowest correlation coefficient? If you have to choose two stocks for your portfolio, which pair would give you the greatest benefit with regard to diversification? Explain.