The following are monthly percentage price changes for four market indexes.

Compute the following.

a$.$ Average monthly rate of return for each index. Round your answers to five decimal places.

DJIA:

S&P $500$:

Russell $2000$:

Nikkei:

b$.$ Standard deviation for each index. Do not round intermediate calculations. Round your answers to four decimal places.

DJIA:

S&P $500$:

Russell $2000$:

Nikkei:

Covariance $($DJIA$,$ S&P $500)$:

Covariance $($S&P $500,$ Russell $2000)$:

Covariance $($S&P $500,$ Nikkei$)$:

Covariance $($Russell $2000,$ Nikkei$)$:

Correlation $($DJIA$,$ S&P $500)$:

Correlation $($S&P $500,$ Russell $2000)$:

Correlation $($S&P $500,$ Nikkei$)$:

Correlation $($Russell $2000,$ Nikkei$)$:

Using the unrounded answers from parts $($a$),($b$),$ and $($d$),$ calculate the expected return and standard deviation of a portfolio consisting of equal parts of $(1)$ the S&P and the Russell $2000$ and $(2)$ the S&P and the Nikkei. Do not round intermediate calculations. Round your answers to five decimal places.

Expected return $($S&P $500$ and Russell $2000)$:

Standard deviation $($S&P $500$ and Russell $2000)$:

Expected return $($S&P $500$ and Nikkei$)$:

Standard deviation $($S&P $500$ and Nikkei$)$:

Since S&P $500$ and Russell $2000$ have a strong correlation, meaningful reduction in risk if they are combined.

Since S&P $500$ and Nikkei have a strong correlation, meaningful reduction in risk if they are combined.