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Statistics for three stocks A, B & C are shown in the following tables: Stock A Stock B Stock C Standard Deviation 40% 20% 40%
Statistics for three stocks A, B & C are shown in the following tables:
Stock A | Stock B | Stock C | |
Standard Deviation | 40% | 20% | 40% |
Correlations of Returns:
Stock | A | B | C |
A | 1.00 | 0.91 | 0.53 |
B | 1.00 | 0.12 | |
C | 1.00 |
Only on the basis of the information provided in the tables and given the 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 & C, which portfolio would you recommend? SHOW CORRELATION OF RERETURN?Justify your answer.
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