4.) Below is annual stock return data on Hollenbeck Corp and Luzzi Edit, Inc.

Year Hollenbeck Luzzi Edit

2010 10% -3%

2011 15% 0%

2012 -10% 15%

2013 5% 10%

a. What is the average return, variance, and standard deviation for each stock?

b. What is the expected portfolio return on a portfolio comprised of

i. 25% Hollenbeck Corp and 75% Luzzi Edit?

ii. 50% Hollenbeck Corp and 50% Luzzi Edit?

iii. 75% Hollenbeck Corp and 25% Luzzi Edit?

c. Without doing any calculations, would you expect the correlation between the returns on Hollenbeck Corp and Luzzi Edit's stock to be positive, negative, or zero? Why?