Amount Invested

Weight
Expected Return
Standard deviation
Correlation

STOCK A STOCK B
40
60
40%
60%
11%
25%
15%
20%
(0.60)
2

Correlation -1
Correlation -60
Correlation -30
Correlation 0

Portfolio Expected Return

Portfolio Variance
Portfolio Standard Deviation

19.40%
0.94%
9.67%

Correlation +.30
Correlation +.60
Correlation +1

Weight
10%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%

19.40%
16.10%
17.20%
18.30%
19.40%
20.50%
21.60%
22.70%
23.80%
24.90%
26.00%

9.67%
11.16%
10.48%
9.97%
9.67%
9.60%
9.77%
10.15%
10.73%
11.48%
12.37%

Portfolio Possibilities Curve

30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%