Covariance and Correlation

The following table shows the expected returns from six different stocks in three different states of the economy: MAY YOU SHOW EXCEL WORK

State of Economy	Probability	Return Stock A	Return Stock B	Return Stock C	Return Stock D	Return Stock E	Return Stock F
Growth	1/3	30%	3%	15%	24%	0%	18%
Status Quo	1/3	22%	1%	3%	6%	3%	3%
Recession	1/3	20%	4%	-3%	-6%	6%	-3%

Consider of a portfolio consisting of 50% in Stock E and 50% in Stock F. Calculate the covariance between Stocks E and F. Calculate the expected return of the portfolio. Calculate the standard deviation of the portfolio.

E) Portfolio EF
WE	WF	CovEF	CorrEF	E[REF]	EF