FINANCE ON THE WEB RISK
Using the Excel File:
1. Pick 3 stocks from the Most Actives List and download the last three years of monthly adjusted prices for these stocks and S&P 500 Index to Table 1
2. Calculate the monthly retuns of these three stocks in Table 1
3. Calculate the standard deviations of returns for three stocks and a portfolio with equal investment in three stocks using Table 5, similar to the TESLA example we did in class. Use the excel function STDEVP to check your answer and enter your findings in Table 2
4. Use the CORREL Function to calculate the Correlation Coefficient of monthly returns for each pair of stock and enter in Table 3. Whick pair provides the greatest gain from diversification? Why?
5.Calculate the beta, market variance and firm specific variance for three stocks and a portfolio with equal investment in three stocks using the TREND function in Table 4