Discuss the correlation of returns between the two stocks


Stock W has expected return of 9% and standard deviation of12%. Stock Y has expected return of 16% and standard deviation of 20%.

You only invest in these two stocks. Your investment weight in W is -19. Graph stock correlation (x-axis) versus standard deviation of returns (y-axis) as the correlation of returns between the two stocks goes from -0.9 to 0.9.

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Finance Basics: Discuss the correlation of returns between the two stocks
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