The V olatility of a T w o-S t o c k P o r t f olio
Using the data in the following table, estimate (a) the average return and volatility for each stock, (b) the covariance between the stocks, and (c) the correlation between these two stocks.
| Year | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 |
| Stock A | - 10% | 20% | 5% | - 5% | 2% | 9% |
| Stock B | 21% | 7% | 30% | - 3% | - 8% | 25% |
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