Assignment:
In order to diversify risk, investors are often encouraged to invest in assets whose returns have either a negative relationship or no relationship. The annual return data on two assets is shown below.
| Return A |
Return B |
| -20% |
8% |
| -5 |
5 |
| 18 |
-1 |
| 15 |
-2 |
| -12 |
2 |
Construct a scatterplot. For diversity purposes, would the investor be wise to include these assets in her portfolio? Explain.
Provide complete and step by step solution for the question and show calculations and use formulas.