In the example, the standard deviation of the portfolio's return is lower than that of...
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Finance
In the example, the standard deviation of the portfolio's return is lower than that of these two funds B and S. What is the intuition behind this? Is it always the case? Examine how the returns on these two funds behave. Do they move together or in opposite directions?
portfolio proportions
Bond
Stock
Bond
Stock
SD
Mean
mean
8.80%
12.50%
0
1
17.50%
12.50%
VAR
0.007536
0.030625
0.1
0.9
15.39%
12.13%
SD
8.68%
17.50%
0.2
0.8
13.34%
11.76%
COV
-0.0066
0.3
0.7
11.36%
11.39%
Cor
-0.4345
0.4
0.6
9.52%
11.02%
0.5
0.5
7.90%
10.65%
0.6
0.4
6.67%
10.28%
0.7
0.3
6.06%
9.91%
0.8
0.2
6.27%
9.54%
0.9
0.1
7.23%
9.17%
1
0
8.68%
8.80%
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