The following are the monthly rates of return for Madison Cookies and for Sophie Electric during a six-month period.

Month Madison Cookies Sophie Electric

1 -0.02 0.05

2 0.05 -0.03

3 -0.05 -0.10

4 0.15 0.18

5 -0.02 -0.04

6 0.06 0.02

Compute the following. Do not round intermediate calculations. Round your answers to four decimal places.

A). Average monthly rate of return R_i for each stock.

Madison Cookies: _________________

Sophie Electric: _________________

B). Standard deviation of returns for each stock.

Madison Cookies: ____________

Sophie Electric: _____________

C). Covariance between the rates of return.

_____________

D). The correlation coefficient between the rates of return.

___________

Would these two stocks be good choices for diversification? Why or why not?

Madison Cookies and Sophie Electric are -Select-good bad choices for diversification as these assets have -Select-high positive high negative low positive low negative correlation.