Standard deviation and standard deviation of returns

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Reference no: EM131980497

You construct a portfolio from two stocks, Alpha and Beta, by investing 0.5 of the portfolio in Alpha and the rest in Beta. Stock Alpha has a standard deviation of return of 42%, while stock Beta has a standard deviation of return of 29%. The correlation coefficient between the returns on the two stocks is 0.52. What is the standard deviation of the return on this portfolio? NOTE: Standard deviation is a statistical concept that can be calculated for any random measure (height, length, age, number of students, returns, etc). But in this class we only care about the standard deviation of returns so terms "standard deviation" and "standard deviation of returns" are exactly the same.

Reference no: EM131980497

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