Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable representing annual percent return for the Vanguard Total Stock Index (all Stocks). Let y be a random variable representing annual return for the Vanguard Balanced Index (60% stock and 40% bond). For the past several years, assume the following data. Compute . 12 0 39 24 33 26 27 -12 -12 -24 6 -4 27 15 25 17 15 -4 -5 -6

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Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable representing annual percent return for the Vanguard Total Stock Index (all Stocks). Let y be a random variable representing annual return for the Vanguard Balanced Index (60% stock and 40% bond). For the past several years, assume the following data. Compute .
 
  12 0 39 24 33 26 27

-12

-12

-24

  6

-4

27 15 25 17 15 -4

-5

-6

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