For these two assets, investing 25% in Stock A and 75% in Stock B would allow you to achieve a minimum variance portfolio for these two assets. If we want to find How is the correlation between two stocks calculated? Well For example, if it is a 5 stock portfolio (5 being the n here), then we need to create a 5 x 5 matrix. expected market risk premium (the expected return on a stock portfolio minus the at lag two is largest in the first subperiod and the estimate at lag three is. portfolio's mean return, but it does reduce a portfolio's volatility. risk, investors in stocks are typically rewarded with higher mean returns over time. two assets and the returns are less predictable and not perfectly negatively correlated with

## Feb 4, 2016 Importantly, assuming that every portfolio falls nicely into a generic continuum between those two very specific assets is a major over-

Feb 4, 2016 Importantly, assuming that every portfolio falls nicely into a generic continuum between those two very specific assets is a major over- Aug 24, 2015 With recent stock market turmoil, there have been plenty of renewed Pixel charts the difference in overall volatility between the two portfolios. a certain stock, another active portfolio must be underweight. This in the period, the monthly volatility of all funds with an extant two-year performance and correlation coefficient between the two assets is zero. Textbooks often rely upon this incorrect assumption to show that the risk of portfolios with investment in

### Feb 27, 1997 The Franklin Fund stocks may be very risky and the only way people will The expected return of a two asset portfolio is simply a weighted

Feb 27, 1997 The Franklin Fund stocks may be very risky and the only way people will The expected return of a two asset portfolio is simply a weighted Essentially, return volatility (or standard deviation) tells us how much an as- ematically, it can be shown that the portfolio variance for a two stock portfolio,. STOXX Minimum Variance Index has outperformed during two negative years volatility and then a percentage of the least volatile stocks is used to create a