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Consider the Characteristics of the Following Three Stocks

question 16

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Consider the characteristics of the following three stocks:
The correlation between Thumb Devices and Air Comfort is -0.12.The correlation between Thumb Devices and Sport Garb is 0.89.The correlation between Air Comfort and Sport Garb is -0.85.If you can pick only two stocks for your portfolio,which would you pick? Why?
Consider the characteristics of the following three stocks: The correlation between Thumb Devices and Air Comfort is -0.12.The correlation between Thumb Devices and Sport Garb is 0.89.The correlation between Air Comfort and Sport Garb is -0.85.If you can pick only two stocks for your portfolio,which would you pick? Why?   A) Combine Thumb Devices and Sport Garb because they have a high correlation. B) Combine Thumb Devices and Air Comfort because of high standard deviations. C) Combine Air Comfort and Sport Garb due to negative correlation. D) Combine Thumb Devices and Sport Garb because Thumb Devices has the highest return and Sport Garb has the lowest standard deviation.

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Definitions:

Standard Deviation

A measure of the amount of variation or dispersion of a set of values from the mean.

ACT Type Score

A numerical measurement that represents a student's achievement on the ACT test, which is commonly used for college admissions in the United States.

Normal Curve

A bell-shaped curve that represents the distribution of many types of data where most occurrences take place around the average, and fewer instances occur as you move away from the center.

Standard Deviation

A measure of the dispersion or variability within a set of data points, indicating how much individual data points differ from the mean of the data set.

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