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The correlation coefficients between several pairs of stocks are as follows: Corr(A, B) = 0.85; Corr(A, C) = 0.60; Corr(A, D) = 0.45. Each stock

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The correlation coefficients between several pairs of stocks are as follows: Corr(A, B) = 0.85; Corr(A, C) = 0.60; Corr(A, D) = 0.45. Each stock has an expected return of 8% and a standard deviation of 20%. If your entire portfolio is now composed of stock A and you can add some of only one stock to your portfolio, would you choose (assuming short sales are not allowed): OB OD O Need more data Would your answer change for more risk-averse or risk-tolerant investors? O Yes O No

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