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Question 2 (25 Marks) Wells Investment has an equity fund with a portfolio of two-stocks: Olive Group and Palm Corporation. The realized returns for Olive
Question 2 (25 Marks) Wells Investment has an equity fund with a portfolio of two-stocks: Olive Group and Palm Corporation. The realized returns for Olive Group and Palm Corporation are as follows: a. Calculate the average annual return, variance and standard deviation respectively for stock Olive and stock Palm. 10 marks b. Calculate the covariance between stock Olive's and stock Palm's returns. 7 marks c. Calculate the correlation coefficient between stock Olive's and stock Palm's returns. 4 marks d. Calculate the variance on a portfolio that is made up of equal investments in stock Olive and stock Palm. 4 marks Show all your calculations
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