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You have a portfolio with a standard deviation of 21% and an expected return of 19%. You are considering adding one of the two stocks

You have a portfolio with a standard deviation of 21% and an expected return of 19%. You are considering adding one of the two stocks in the following table. If after adding the stock you will have 25% of your money in the new stock and 75% of your money in your existing portfolio, which one should you add?

Expected

Return

Standard

Deviation

Correlation with

Your Portfolio's Returns

Stock A

14%

22%

0.2

Stock B

14%

18%

0.5

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