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You have a portfolio with a standard deviation of 30% and an expected return of 18%. You are considering adding one of the two stocks
You have a portfolio with a standard deviation of 30% and an expected return of 18%. You are considering adding one of the two stocks in the following table. If after adding the stock you will have 70% of your money in the new stock and 30% of your money in your existing portfolio, what is the expected return and standard deviation of this new combined portfolio? Which stock A or B should you add? Expected Return Standard Deviation Correlation with Your Portfolio's Returns Stock A Stock B 15% 15% 25% 50% 0.1 -0.1
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