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Three minimum variance portfolios

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Two stocks that have benefited from COVID-19 are Aeris Environmental Ltd and A2 Milk Company. The expected return and standard deviation of the minimum variance portfolio are: E(rmin): 5.33%, σmin: 6.995%.

The Two stocks that have 'suffered' during the COVID-19 are Corporate Travel Management Limited and Sydney Airport Limited Stapled Securities. The graph highlights the expected return and standard deviations of the two portfolios to be: E(rmin) = 11.76%, σmin = 6.70%

One stock that has benefited from COVID-19 is Zoono Group Limited and the other stock that has suffered during this pandemic is Virgin Australia Holdings Limited. The expected return and standard deviation of the minimum variance portfolio are: E(rmin)= 8.07%, σmin= 7.18%

Which point across the three minimum variance portfolios generates the best risk/reward tradeoff? How about the lowest total variance? Why do you think this is the case?

Reference no: EM132516473

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