Assignment Task: Calculating Returns
Use the 'Adj Close' column to obtain returns for each period. Remember that the Adjusted Close column has already adjusted the prices for dividends and stock splits so you do not have to adjust for it again. Just use the adjusted close column to obtain the return R for each month t as: Rt = Adj Closet/Adj Closet-1 - 1
MINICASE - Solve for the following:
A. Calculate the monthly returns for 01/01/2017 - 12/31/2019 period for
(i) S&P 500
(ii) GE
(iii) TRIP
(iv) YELP
(v) TSLA
B. What is the average monthly return and standard deviation of returns for 01/01/2017 - 12/31/2019 period for
(i) S&P 500
(ii) GE
(iii) TRIP
(iv) YELP
(v) TSLA
C. Calculate the correlation between:
(i) GE and TRIP
(ii) GE and YELP
(iii) GE and TSLA
(iv) TRIP and YELP
(v) TRIP and TSLA
(vi) YELP and TSLA
(vii) Explain your findings
D. Calculate the stock betas for the 01/01/2017 - 12/31/2019 periods for:
(i) GE
(ii) TRIP
(iii) YELP
(iv) TSLA
(v) Comment on your findings.
E. Form three portfolios and then answer the following questions:
Portfolio 1: 50% in GE and 50% in TRIP
Portfolio 2: 1/3rd in GE, 1/3rd in TRIP and 1/3rd in YELP
Portfolio 3: 25% in GE, 25% in TRIP, 25% in YELP, and 25% in TSLA
(i) What is the average return and standard deviation of each portfolio?
(ii) What happens to your portfolio return and standard deviation as you add more securities in your portfolio?
(iii) What could be the reason behind the pattern that you observe?
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