Please download monthly adj. close prices from 12/1/2012 to 12/1/2017 for the following individuals stocks:

• Alphabet Inc. (GOOG)
• Boeing (BA)
• Costco Wholesale Corporation (COST)
• Wells Fargo & Company (WFC)
• Tesla, Inc. (TSLA)

Information on these stocks is available on the Yahoo! finance site. After typing in the sticker symbol and retrieving the quote data, choose Profile to get a summary of the stock. Please review each stock before doing any of the analysis below.

1. Compute monthly returns for each individual stock.
2. Compute univariate descriptive statistics (mean, standard deviation) for each return series and comment. Arrange these values in a table.
3. Compute the sample covariance matrix of the returns on the five stocks and comment on the direction of linear association between the asset returns.
4. Compute the sample correlation matrix of the returns on the 5 stocks.
   1. Which assets are most highly correlated?
   2. Which are least correlated?
   3. Based on the estimated correlation values do you think diversification will reduce risk with these assets?
5. Convert the monthly sample means into annual estimates by multiplying by 12. Monthly variances and covariances can be annualized by multiplying by 12. Standard deviations are annualized by multiplying monthly standard deviations by the square root of 12.
6. Using the annualized estimated means, variances and covariances computed earlier. Suppose, an investor currently owns a portfolio consisting of two stocks, COST and WFC, with 60% invested in COST.
7. 1. Calculate the expected value of the portfolio returns.
   2. Calculate the risk (standard deviation) of the portfolio returns.
8. Suppose the previous investor wants to keep her stake in Costco Wholesale Corporation (COST) and would like other asset to substitute for WFC. Which of the remaining three stocks will give her the maximum benefit of diversification, assuming she still keeps 60% invested in COST?
9. 1. Calculate the expected value of returns of this new portfolio.
   2. Calculate the risk (standard deviation) of this new portfolio.