Relationship between portfolio risk and stocks in portfolio

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Reference no: EM13203487

Beginning with the first stock, create equally-weighted portfolios by successively including one additional stock, that is, the first portfolio consists of only Stock 1, the second contains Stock 1 and Stock 2, the third - Stock 1, Stock 2, and Stock 3, and so on. You will have ten portfolios in total. For each portfolio, calculate monthly returns, average monthly return, and the standard deviation of monthly returns. Now make a plot of portfolio standard deviation of return vs. number of stocks in the portfolio. What can you say about the relationship between portfolio risk and the number of stocks in the portfolio? What do you think is responsible for this relationship?

Company Name Ticker Symbol
 KB Home  KBH
 Biogen Idec  BIIB
 Symantec Corp  SYMC
 ConAgra Foods  CAG
 Chevron Corporation  CVX
 Hormel Foods  HRL
 Petroleum & Resources Inc  PEO
 Charles Schwab  SCHW
 Wal-Mart Stores  WMT
 Bristol Myers Squibb Co  BMY

Reference no: EM13203487

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