Question: Stocks K L and M each has the same expected

Stocks K, L, and M each has the same expected return and standard deviation. The correlation coefficients between each pair of these stocks are:
K and L correlation coefficient = +0.8 K and M correlation coefficient = +0.2 L and M correlation coefficient = −0.4 Given these correlations, a portfolio constructed of which pair of stocks will have the lowest standard deviation? Explain.




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  • CreatedDecember 17, 2014
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