The Excel file Correlation Matrix Data contains monthly return data for five (5) stocks.

a. Compute the Correlation Matrix for the five (5) stocks.

b. Using EXCELs Text Box feature explain/identify

i. The characteristics of the Correlation Matrix.

ii. What the correlation coefficient measures.

iii. How the correlation coefficient values are used in portfolio theory, i.e., the role of the correlation coefficient in portfolio theory.

\begin{tabular}{|c|c|c|c|c|c|} \hline \multicolumn{2}{|l|}{ Monthly Return Data for Five Stocks } & \\ \hline & & & & & \\ \hline & & & & & \\ \hline Month & Stock A & Stock B & Stock C & Stock D & Stock E \\ \hline 1 & 8.77% & 26.91% & 4.83% & 3.93% & 5.10% \\ \hline 2 & 0.34% & 9.77% & 2.93% & 2.40% & 2.51% \\ \hline 3 & 3.39% & 13.38% & 13.36% & 8.05% & 6.62% \\ \hline 4 & 1.30% & 19.20% & 2.66% & 10.25% & 22.05% \\ \hline 5 & 1.69% & 7.69% & 5.93% & 4.93% & 7.42% \\ \hline 6 & 2.58% & 30.62% & 21.68% & 8.32% & 3.30% \\ \hline 7 & 3.20% & 3.64% & 22.70% & 1.32% & 0.58% \\ \hline 8 & 3.47% & 30.54% & 9.13% & 3.61% & 1.16% \\ \hline 9 & 2.91% & 7.93% & 12.07% & 8.29% & 0.72% \\ \hline 10 & 4.25% & 7.34% & 10.77% & 12.40% & 2.16% \\ \hline 11 & 5.30% & 14.27% & 5.18% & 3.30% & 13.38% \\ \hline 12 & 0.41% & 35.06% & 1.90% & 6.76% & 3.74% \\ \hline 13 & 2.85% & 21.97% & 3.73% & 12.15% & 2.06% \\ \hline 14 & 3.05% & 11.46% & 5.39% & 4.74% & 4.55% \\ \hline \end{tabular}