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Statistics for three stocks, A, B, and C, are shown in the following tables. Standard Deviation of Returns Stock A B C Standard deviation (%)
Statistics for three stocks, A, B, and C, are shown in the following tables. Standard Deviation of Returns Stock A B C Standard deviation (%) 40 20 40 Correlation of Returns Stock A B C A 1.00 0.90 0.50 B 1.00 0.10 C 1.00 Only on the basis of the information provided in the tables, and given a choice between a portfolio made up of equal amounts of stocks A and B or a portfolio made up of equal amounts of stocks B and C, which portfolio would you recommend? Justify your choice.
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