Obtain from Bloomberg the end of year values for the period 2010–2021 of both FTSE100 (UKX) Index and S&P500 (SPX) Index. Assume that you are a risk-averse investor. Explore the risk-return relationship for the two assets. Assume that you form a portfolio by investing equal amount of money in each asset. Determine the average and standard deviation of the portfolio’s annual returns. Provide your interpretation of the risk and return of the equally weighted portfolio compared to those of the individual assets.
Calculate and graph the average annual returns and standard deviations of all portfolios that are combinations of FTSE100 (UKX) index and S&P500 (SPX) Index, with the proportion of FTSE100 (UKX) index ranging from 0, 10, 20, 30, 40, 50, 60, 70, 80, 90, 100%.