What is the standard deviation of a portfolio which is comprised of $9,000 invested in stock S and $6,000 in stock T? What is the correlation coefficient between stock S and stock T?

A

The standard deviation allows calculating a dispersion of possible values from the expected value of the mean. As such, it can be used to assess and understand the potential risks associated with stocks. A higher standard deviation indicates a greater risk of volatility.

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In order to calculate the Standard Deviation for stocks S and T, we would need to find their Estimated Return during the Boom period, the Normal period, and the Recession period. Portfolio E(R) would be required to find the variance, which is then used to find the Standard Deviation. The correlation coefficient represents how well the two stocks work together and if they move in the same direction. If the correlation is zero – the stocks do not work together. If it is negative – the stocks move in the opposite directions.

Standard Deviation for stocks S and T calculation
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Academic.Tips. 2021. "What is the standard deviation of a portfolio which is comprised of $9,000 invested in stock S and $6,000 in stock T? What is the correlation coefficient between stock S and stock T?" November 20, 2021. https://academic.tips/question/what-is-the-standard-deviation-of-a-portfolio-which-is-comprised-of-9000-invested-in-stock-s-and-6000-in-stock-t-what-is-the-correlation-coefficient-between-stock-s-and-stock-t/.

1. Academic.Tips. "What is the standard deviation of a portfolio which is comprised of $9,000 invested in stock S and $6,000 in stock T? What is the correlation coefficient between stock S and stock T?" November 20, 2021. https://academic.tips/question/what-is-the-standard-deviation-of-a-portfolio-which-is-comprised-of-9000-invested-in-stock-s-and-6000-in-stock-t-what-is-the-correlation-coefficient-between-stock-s-and-stock-t/.


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Academic.Tips. "What is the standard deviation of a portfolio which is comprised of $9,000 invested in stock S and $6,000 in stock T? What is the correlation coefficient between stock S and stock T?" November 20, 2021. https://academic.tips/question/what-is-the-standard-deviation-of-a-portfolio-which-is-comprised-of-9000-invested-in-stock-s-and-6000-in-stock-t-what-is-the-correlation-coefficient-between-stock-s-and-stock-t/.

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"What is the standard deviation of a portfolio which is comprised of $9,000 invested in stock S and $6,000 in stock T? What is the correlation coefficient between stock S and stock T?" Academic.Tips, 20 Nov. 2021, academic.tips/question/what-is-the-standard-deviation-of-a-portfolio-which-is-comprised-of-9000-invested-in-stock-s-and-6000-in-stock-t-what-is-the-correlation-coefficient-between-stock-s-and-stock-t/.

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