Yields Year TLS DI PFE WMT 20x5 12.00% 4.50% 5.80% 11.30% 20x6 13.30% 5.30% 5.70% 9.00% 20x7 10.20% 3.10% 5.90% 13.90% 20x8 9.30% 2.70% 4.50% 14.80% 20x9 8.60% 1.90% 6.30% 15.00% Correlations: CPP = Perfect positive correlation, CP = Perfect correlation, SC = No correlation, CN =Negative correlation, CPN = Perfect negative correlation TLS – DI= 0.996145099 = (CPP) DI – PFE= 0.005359947 = (SC) TLS – PFE= 0.08450695 = (CP) DI – WMT= -0.975050934 = (CPN) TLS – WMT= -0.986408221 = (CPN) PFE – WMT= -0.144303856 = (CN) b. Which three of the four stocks would you combine to build a diversified portfolio and why? It starts from the premise that there is an investment distribution in equal parts (33.3%) among the selected shares. c. Calculate the return, risk and coefficient of variation for the portfolio of three stocks selected in the previous exercise. It starts from the premise that there is an investment distribution in equal parts (33.3%) among the selected shares.
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Yields |
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Year |
TLS |
DI |
PFE |
WMT |
|
20x5 |
12.00% |
4.50% |
5.80% |
11.30% |
|
20x6 |
13.30% |
5.30% |
5.70% |
9.00% |
|
20x7 |
10.20% |
3.10% |
5.90% |
13.90% |
|
20x8 |
9.30% |
2.70% |
4.50% |
14.80% |
|
20x9 |
8.60% |
1.90% |
6.30% |
15.00% |
Correlations: CPP = Perfect positive correlation, CP = Perfect correlation, SC = No correlation, CN =Negative correlation, CPN = Perfect negative correlation
TLS – DI= 0.996145099 = (CPP) DI – PFE= 0.005359947 = (SC)
TLS – PFE= 0.08450695 = (CP) DI – WMT= -0.975050934 = (CPN)
TLS – WMT= -0.986408221 = (CPN) PFE – WMT= -0.144303856 = (CN)
b. Which three of the four stocks would you combine to build a diversified portfolio and why? It starts from the premise that there is an investment distribution in equal parts (33.3%) among the selected shares.
c. Calculate the return, risk and coefficient of variation for the portfolio of three stocks selected in the previous exercise. It starts from the premise that there is an investment distribution in equal parts (33.3%) among the selected shares.
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