4.135 More on diversification.
CASE 4.3 Continuing with the previous exercise, suppose Michael's primary goal is to seek a portfolio mix of the biotechnology and information services funds that will give him minimal risk as measured by standard deviation of the portfolio. Compute the standard deviations for portfolios based on the proportion of biotechnology fund in the portfolio ranging from 0 to 1 in increments of 0.1. You may wish to do these calculations in Excel. What is your recommended mix of biotechnology and information services funds for Michael? What is the standard deviation for your recommended portfolio?
4.135
| 0 | 1 | 34.60 | 5.88 |
| 0.1 | 0.9 | 30.92 | 5.56 |
| 0.2 | 0.8 | 28.12 | 5.30 |
| 0.3 | 0.7 | 26.19 | 5.12 |
| 0.4 | 0.6 | 25.13 | 5.01 |
| 0.5 | 0.5 | 24.94 | 4.99 |
| 0.6 | 0.4 | 25.62 | 5.06 |
| 0.7 | 0.3 | 27.18 | 5.21 |
| 0.8 | 0.2 | 29.61 | 5.44 |
| 0.9 | 0.1 | 32.90 | 5.74 |
| 1 | 0 | 37.08 | 6.09 |