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The following are the monthly rates of return for Madison Cookies and for Sophie Electric during a six-month period. Madison Cookies Sophie Electric Month
The following are the monthly rates of return for Madison Cookies and for Sophie Electric during a six-month period. Madison Cookies Sophie Electric Month 1 2 3 4 5 6 Compute the following. Do not round intermediate calculations. Round your answers to four decimal places. a. Average monthly rate of return R, for each stock. Madison Cookies: Sophie Electric: b. Standard deviation of returns for each stock. Madison Cookies: Sophie Electric: c. Covariance between the rates of return. d. The correlation coefficient between the rates of return. -0.02 0.07 -0.08 0.15 -0.01 0.06 Would these two stocks be good choices for diversification? Why or why not? Madison Cookies and Sophie Electric are -Select- choices for diversification as these assets have [-Select- 0.05 -0.03 -0.10 0.14 -0.05 0.02 correlation.
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