In the last 5 years, tesla had an average monthly return of 4.73% with a standard deviation of 16.8%. over the same period, starbucks inc had an average monthly return of 1.72% with a standard deviation of 5.6%. what was the standard deviation of a portfolio of 50% tslaand 50% sbux?

Question

Felix

Mathematics

27 December, 18:06

In the last 5 years, tesla had an average monthly return of 4.73% with a standard deviation of 16.8%. over the same period, starbucks inc had an average monthly return of 1.72% with a standard deviation of 5.6%. what was the standard deviation of a portfolio of 50% tslaand 50% sbux?

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Sunny · Answer 1

The expected return of the portfolio consisting of 50% tsla and 50% sbux will be given by:

E (r) = WbReturn+WaReturn

E (r) = 0.5 (4.73) + 0.5 (1.72)

E (r) = 2.365+0.86

E (r) = 3.225%