Spreadsheet Problem: Returns and Risks Following are the monthly returns for January 2016 to December 2020 of three international stock indices: All Ordinaries of Australia, Nikkei 225 of Japan, and Euronext of Europe. (LG9-3, LG9-4)

a. Compute and compare each index’s monthly average return and standard deviation.

b. Compute the correlation between (1) All Ordinaries and Nikkei 225, (2) All Ordinaries and Euronext, and (3) Nikkei 225 and Euronext, and compare them.

c. Form a portfolio consisting of one-third of each of the indexes and show the portfolio return each year, and the portfolio’s return and standard deviation.

D E G 1 2 Date December-20 All Ordinaries NIKKEI 225 Euronext. Date All Ordinaries NIKKEI 225 H Euronext 1.61% 3.82% 1.36% June-18 2.71% 0.46% -0.41% 3 November-20 9.93% 15.04% 16.95% May-18 0.85% -1.18% -1.36% 4 October-20 2.06% -0.90% -2.93% April-18 3.45% 4.72% 5.12% 5 September-20 -3.79% 0.20% -2.14% March-18 -4.06% -2.78% -1.62% 6 August-20 3.10% 6.59% 2.69% February-18 -0.48% -4.46% -3.26% 7 July-20 0.95% -2.59% -2.28% January-18 -0.34% 1.46% 2.93% 8 June-20 2.20% 1.88% 4.98% December-17 2.39% 0.18% -0.64% 9 May-20 4.90% 8.34% 3.38% November-17 0.79% 3.24% -2.70% 10 April-20 9.53% 6.75% 4.87% October-17 4.03% 8.13% 3.06% 11 March-20 -21.51% -10.53% -16.03% September-17 -0.54% 3.61% 4.53% 12 February-20 -8.56% -8.89% -8.77% August-17 0.04% -1.40% -0.42% 13 January-20 4.69% -1.91% -2.11% July-17 0.17% -0.54% 0.97% 14 December-19 -2.10% 1.56% 1.28% June-17 0.05% 1.95% -3.31% 15 November-19 2.59% 1.60% 2.92% May-17 -3.13% 2.36% 0.90% 16 October-19 -0.41% 5.38% -0.12% April-17 0.74% 1.52% 2.50% 17 September-19 1.53% 5.08% 3.30% March-17 2.48% -1.10% 4.59% 18 August-19 -2.88% -3.80% -1.57% February-17 1.52% 0.41% 2.87% 19 July-19 2.95% 1.15% 0.90% January-17 -0.77% -0.38% -1.84% 20 June-19 3.19% 3.28% 4.83% December-16 3.94% 4.40% 5.57% 21 May-19 1.14% -7.45% -5.94% November-16 1.85% 5.07% 0.32% 22 April-19 2.50% 4.97% 4.23% October-16 -2.22% 5.93% 0.04% 23 March-19 0.14% -0.84% 2.27% September-16 -0.08% -2.59% 0.63% 24 February-19 5.31% 2.94% 4.75% August-16 -2.03% 1.92% -0.01% 25 January-19 3.99% 3.79% 6.16% July-16 6.28% 6.38% 3.49% 26 December-18 -0.69% -10.45% -5.81% June-16 -2.52% -9.63% -4.26% 27 November-18 -2.77% 1.96% -1.26% May-16 2.48% 3.41% 1.64% 28 October-18 -6.52% -9.12% -7.09% April-16 3.19% -0.55% 0.63% 29 September-18 -1.59% 5.49% 0.21% March-16 4.12% 4.57% 1.70% 30 August-18 0.97% 1.38% -1.80% February-16 -2.15% -8.51% -2.79% 31 July-18 1.22% 1.12% 3.19% January-16 -5.39% -7.96% -3.53%