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Stock X has a standard deviation of returns of 25%. Stock Y has a standard deviation of returns of 40%. The correlation coefficient between the

Stock X has a standard deviation of returns of 25%. Stock Y has a standard deviation of returns of 40%. The correlation coefficient between the two stocks is 0.2.

1) You invest 30% in stock X and 70% in stock Y, what is the standard deviation of the portfolio?

2) What special role does the correlation coefficient play in the standard deviation of a portfolio of investments?

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