Problem $11-19$ Diversification $($LO$3)$

Here are the returns on two stocks.

$\backslash$table$[[,\backslash$table$[[$Digital$],[$Cheese$]],\backslash$table$[[$Executive$],[$January$]]],[$February$,+16,+9],[$March$,-3,+2],[$April$,+5,+6],[$May$,+7,+14],[$June$,-4,+3],[$July$,+3,+7],[$August$,-2,-3]]$

Required:

a$-1.$ Calculate the variance and standard deviation of each stock.

a$-2.$ Which stock is riskier if held on its own?

b$.$ Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks.

c$.$ Is the variance more or less than halfway between the variance of the two individual stocks?

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