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5. The Excel file Correlation Matrix Data contains monthly return data for four (4) stocks.
- Compute the Correlation Matrix for the four (4) stocks.
- All other things being equal, which pair of stocks would reduce portfolio risk the most?
- All other things being equal, which pair of stocks would reduce portfolio risk the least?
Month 1 2 N 3 4 5 6 7 8 9 10 11 12 13 14 IBM 4.71% -2.26% -12.17% -5.97% 6.20% -18.01% 9.19% -0.27% 0.60% 8.19% -4.63% -6.09% -1.46% -2.34% -3.42% -30.09% 16.97% 4.92% -7.72% 8.27% -5.51% 3.83% EPB -2.32% -2.51% -8.29% -6.60% 5.07% 6.98% 7.68% -5.62% 7.18% 4.00% 6.50% 5.37% 3.22% -4.04% -6.77% -0.33% 8.53% 5.15% 7.53% -1.11% 6.91% 1.13% TEVA 7.45% -1.77% 2.06% 3.84% 10.67% -0.58% 2.40% -1.74% 0.98% 5.03% 8.22% -3.98% 3.45% 1.07% 2.58% 4.46% -4.79% -1.70% 5.52% 2.84% -4.98% -1.45% HPQ 4.98% -7.14% -6.56% -5.31% -6.23% 3.93% 4.12% -3.23% 4.09% 4.72% -8.27% 0.15% -9.28% -5.42% -3.32% -11.48% 9.30% -2.56% 1.87% 11.19% 0.54% 1.57% 15 16 17 18 19 20 21 22
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