Average monthly returns

NAB

TLS

1%

0%

Average annual returns

NAB

TLS

16.8%

4.5%

Average monthly standard deviation

NAB

TLS

8%

5%

Average annual standard deviation

NAB

TLS

26.8%

18.5%

Monthly Covariance

0.1331%

Annual Covariance

Correlation

1.60%

32.17%

Thank you for providing the necessary data. I'll use these values to calculate the expected return for each stock and for the portfolio with 60% in NAB and 40% in TLS.

### Given Data:
- **Average Monthly Return (NAB)**: 1%
- **Average Monthly Return (TLS)**: 0%
- **Portfolio Weights**:
  - NAB: 60%
  - TLS: 40%

### Expected Returns Calculation:
1. **Expected Return of NAB**: 1%
2. **Expected Return of TLS**: 0%

### Expected Return of the Portfolio:
The expected return of the portfolio (\( E(R_p) \)) is calculated as:

\[
E(R_p) = (w_{NAB} \times E(R_{NAB})) + (w_{TLS} \times E(R_{TLS}))
\]

Where:
- \( w_{NAB} = 0.6 \)
- \( w_{TLS} = 0.4 \)
- \( E(R_{NAB}) = 1\% \)
- \( E(R_{TLS}) = 0\% \)

Now, I'll calculate this: 

\[
E(R_p) = (0.6 \times 1\%) + (0.4 \times 0\%) = 0.6\%
\]

### Summary:
- **Expected Return of NAB**: 1% per month
- **Expected Return of TLS**: 0% per month
- **Expected Return of Portfolio (60% NAB, 40% TLS)**: 0.6% per month

Would you like to dive into more details, or do you have any other questions?

Here are some related questions you might consider:
1. How would the expected portfolio return change if the weights of NAB and TLS were adjusted?
2. What is the risk (standard deviation) of the portfolio based on the provided data?
3. How would annual expected returns compare to monthly returns?
4. What is the significance of the correlation between NAB and TLS in portfolio construction?
5. How does the covariance between NAB and TLS impact the portfolio's risk?

**Tip:** Understanding how correlation and covariance between assets affect portfolio risk is crucial when constructing a diversified investment portfolio.

Learn how to calculate the expected return of a portfolio with NAB and TLS stocks based on their monthly returns and portfolio weights. Detailed step-by-step solution included.

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