Action Item: Build a correlation table for the 5 companies.

5 Year Returns: Data Collection
	BAC	JPM	WFC	MSFT	TGT
2017
2018
2019
2020
2021
Company Correlation Coefficients
Correlation Table	BAC	JPM	WFC	MSFT	TGT
BAC	1
JPM		1
WFC			1
MSFT				1
TGT					1

• Action item:explain how investors can use correlation coefficients to analyze diversification of their portfolios.

• Action Item:consider the correlation coefficients for BAC, JPM and WFC: are the results what you would expect? Is there anything surprising in the results? Explain.

• Action Item:assume this is your portfolio. Does your portfolio have a high degree of diversification? Explain why or why not.

Part III: Rebuild Your Portfolio to Be More Diverse

• Action item.Explain how you could improve the degree of diversification of your portfolio by replacing two of the companies in this 5-company portfolio.

• Action Item:re-create the correlation table with your two replacement companies. (You may use Tab 3 "New Portfolio Correlation" of the Excel workbook to organize your information and perform calculations.)

Action Item:Explain why your new portfolio is more diverse than the original.