When Constructing a Portfolio, Standard Deviations, Expected Returns, and Correlation

question 36

Essay

When constructing a portfolio, standard deviations, expected returns, and correlation coefficients are typically calculated from historical data. Why may that be a problem?

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Definitions:

Systemic Insecticides

Chemicals that are absorbed by a plant and provide protection from pests by poisoning them when they feed on the plant.

Malathion

A chemical compound used as an insecticide, particularly effective against mosquitoes but also posing potential risks to human health and the environment.

Chlorinated Hydrocarbons

A group of chemical compounds that contain chlorine, carbon, and hydrogen, used in industrial applications but known for their environmental persistence and potential toxicity.

Aldrin

A highly toxic substance once used as an insecticide and rodenticide, now banned or restricted in many countries due to its environmental impact.