Presently you own shares of stock in Company A and are considering adding some shares in either

Question:

Presently you own shares of stock in Company A and are considering adding some shares in either Company B or Company C. The standard deviations of all three firms are exactly the same, but the correlation between the returns for Company A and Company B is .5, whereas it is -.5 between the returns for Company A and Company C. How will the risk or standard deviation of your investment returns change if you decide to invest in Company A's and Company B's common stock? How will the risk or standard deviation of your returns change if you decide to invest in Company A's and Company C's common stock? If the on the stock of all three companies is the same, how will your portfolio's be impacted by your decision to invest in either Company B or C along with Company A?
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...