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Using the special case of two stocks, and the equation down below, explain in detail how you could get the graph ( next page on
Using the special case of two stocks, and the equation down below,
explain in detail how you could get the graph next page on the righhand side where the correlation is negative
Show all your work equations and relevant explanations
sigma pwAsigma AwBsigma BwAwBsigma AB
The general equation for many stock portfolio
Portfolio Variance sumiN sumjN wiwjsigma ij
Wi is the weight of asset i in the portfolio
same for j
sigma ij is the covariance between assets i and j
For a twoasset portfolio, this formula is:Risk vs return for Feasible Portfolios
vsRisk vs return for Feasible Portfolios
Case :
Case :
Case :
Actual Efficient Frontier
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