you have invested in two shares, Tinkle.com and Circumbendibus Wheels. Tinkle.com has volatility 38.20%, while Circumbendibus Wheels has volatility 35.90%. The correlation between the two shares' returns is 0.44. You have allocated 50.00% of your money to Tinkle.com. What is the volatility of your portfolio?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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you have invested in two shares, Tinkle.com and Circumbendibus Wheels. Tinkle.com has volatility 38.20%, while Circumbendibus Wheels has volatility 35.90%. The correlation between the two shares' returns is 0.44. You have allocated 50.00% of your money to Tinkle.com. What is the volatility of your portfolio?

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In finance we keenly and closely look at portfolio volatility along with the volatility of individual stocks in the portfolio.

This is because volatility is a measure of risk and in finance we aim to maximize returns for a given level of risk or minimize risk for a given level of returns.

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