Portfolio analysis
4. Suppose you form a portfolio that invests 10% in T,20% in JPM, 30% in NEM and 40% in CVX. Calculate (a) portfoliomonthly returns, (b) portfolio's average monthly return, and (c)standard deviation of portfolio monthly returns. Discuss. Highlightyour final answers.
Average Return E (r) of each stock: The average return on eachof these stocks were calculated in excel using today'sprice-yesterdays price/yesterday's price and then the average takenfrom 114 days of adj. closing cost.
Ave. Return E(T)=0.85% StDEV(T)=4.46%
Ave. Return(JPM)=1.36% StDEV(JPM)=6.94%
Ave.Return E(NEM)=0.60% StDEV(NEM)10.30%
Ave. Return E(CVX)=0.90% StDEV(CVX)5.74%
Weight
WW(T)=10%
W(JPM)20%
W(NEM)30%
W(CVX)40%
E (r)ptf = W(T)*E(T) + W(JPM)*E(JPM) + W(NEM)*E(NEM)+W(CVX)*E(CVX)
******I calculated in excel and got these answers: Isthe E(r)ptf the portfolio monthly returns or the average monthlyreturn? How do you calculate the (a) portfolio montly returns and(b) the average monthly return?
E(r) ptf=0.90%
StDEV(r) ptf=2.51%
