You will invest in the stock Waters Corporation(WAT) at the beginning of 2020 for one year. Suppose that you are also considering investing in another asset from the three ETFs. Use data from the start of 2015 to the end of 2019 to forecast the mean returns, volatilities and correlations (between the stock and the ETFs) for 2020. Suppose you cannot short sell the stock but short selling the ETFs is possible. Which ETF would you choose? Plot the investment opportunity sets for three pairs in the same mean-stdev diagram. Find out the optimal risky portfolio for each pair and explain your choice of ETF.

The three ETFs are

1. Vanguard S&P500 ETF (ticker symbol VOO)

2. SPDR Gold Trust (ticker symbol GLD

3. iShares iBoxx investment grade corporate bond ETF (ticker symbol LQD)