Standard Deviation of ReturnsStock

A

B

C

Standard Deviation (%)

40

20

40

Correlations of Returns

Stock

A

B

C

A

B

C

1.00

0.90

1.00

0.50

0.10

1.00

Onlyon the basis of the information provided in the tables, and given a choice between a portfolio made up of equal amounts of stocksAandB ora portfolio made up of equal amounts of stocksBandC,which portfolio would you recommend? Justify your choice.