Suppose that we want to construct a portfolio from two stocks whose returns are r1 and r2, respectively: rw = w1r1 + w2r2 with w1 + w2 = 1, where w1 and w2 are weights on stock 1 and 2, respectively. r1 mean = .06 and variance= 2. r2 mean = .011 and variance = 4. Let the usual assumptions about minimum variance portfolio hold true, where w1+ w2= 1.

If cov(r1, r2) = 1 what are the weights of the portfolio that minimizes variance?

If cov( r1, r2)= -1 ?