 Consider a two-asset portfolio consisting of 60% in your first company and 40% in your second company. Its expected return in -0.31% and its standard deviation is 4.69%

It looks like you're providing information about a two-asset portfolio. The portfolio is composed of two companies with the following weights: 

- **60%** in the first company
- **40%** in the second company

You’ve also mentioned that the **expected return** of the portfolio is **-0.31%** and its **standard deviation (volatility)** is **4.69%**.

To understand this further, we can break down these metrics and potentially calculate other key portfolio metrics or statistics:

### 1. **Expected Return of the Portfolio**: 
   The expected return of the portfolio, **-0.31%**, represents the weighted average of the expected returns of the individual assets. However, without knowing the expected returns of each company, we cannot calculate their individual contributions directly. 

### 2. **Portfolio Standard Deviation (Risk)**: 
   The standard deviation of **4.69%** gives a measure of the overall risk or volatility of the portfolio. The standard deviation depends on the individual volatilities of the two assets and the correlation between them. The formula for the portfolio's standard deviation is:

   \[
   \sigma_p = \sqrt{w_1^2 \sigma_1^2 + w_2^2 \sigma_2^2 + 2w_1w_2\sigma_1\sigma_2\rho_{12}}
   \]

   Where:
   - \( w_1 \) and \( w_2 \) are the portfolio weights (0.60 and 0.40 respectively),
   - \( \sigma_1 \) and \( \sigma_2 \) are the standard deviations of the first and second companies,
   - \( \rho_{12} \) is the correlation between the two companies' returns.

### 3. **Correlation & Diversification Effect**:
   The correlation \( \rho_{12} \) between the two companies plays a significant role in determining the overall portfolio risk. If the correlation is less than 1, it helps reduce risk due to diversification. If \( \rho = 1 \), there is no diversification benefit, and the portfolio’s standard deviation would be the weighted average of the individual standard deviations.

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Would you like to calculate or analyze any additional metrics, such as the individual company returns, volatilities, or the correlation between the companies? 

Here are a few relevant questions:
1. What are the expected returns of each company?
2. What are the individual standard deviations (volatilities) of the companies?
3. Do you know the correlation between the two companies' returns?
4. Would you like to explore the Sharpe ratio for this portfolio?
5. Would you like help constructing a portfolio with different weights?

**Tip**: Reducing portfolio risk is often achieved through diversification, which depends on the correlation between the assets in your portfolio. Lower correlations generally lead to better risk reduction.

Consider a two-asset portfolio consisting of 60% in your first company and 40% in your second company. Its expected return is -0.31% and its standard deviation is 4.69%.

Analyze a two-asset portfolio with 60% in the first company and 40% in the second. Learn how to calculate expected returns, standard deviation, and the impact of asset correlation on risk. This problem covers key concepts in portfolio theory and statistics, making it ideal for finance students.

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