Portfolio Management and Risk Analysis
Using weekly price data of the 30 Dow Jones Industrial Average (DJIA) stocks for the past three years, construct the portfolios listed below.
Portfolios Structure: 6 portfolios of 5 stocks, 3 portfolios of 10 stocks, 2 portfolios of 15 stocks, and 1 portfolio of 30 stocks
- For the portfolios, compute the returns, standard deviations and coefficient of risk variation.
- Analyze the risk and return patterns and diversification benefits.
- Based on the risk/return analysis, which portfolio selections are the most profitable?
- How do the portfoliosâ€™ performances compare to the S&P 500â€™s?
- What are the advantages and disadvantages of including international stocks in the portfolio?
- If Mr. Smith chooses to include foreign stocks in the portfolio, how can he use derivatives to hedge against currency risk which can be present from international investing? Your well-written draft should meet the following requirements:
Your well-written paper should meet the following requirements:
- Be two or three pages in length for the analysis and explanations
- Be formatted according to the CSU-Global Guide to Writing and APA (Links to an external site.)
- Include Excel spreadsheets with data, portfolios, and risk and return computations; these spreadsheets should be embedded in the Word document as an appendix after your analysis and explanations
- Include a minimum of three credible references.