Alex Sharpe 
Alex Sharpe Assignment – T. Jabran
Answer 1.
By comparing both the stocks, the riskiest stock in this case is Reynolds. It has the highest return as well as higher standard deviation and the higher variance. If we compare both stocks, Reynolds is riskier than Hasbro in this case. The higher variance indicates higher chance that the actual return on Reynolds will deviate from the expected return. S&P 500
REYNOLDS
HASBRO
Mean/Average
0.574333
1.874833
1.183833
Variance
12.972333
87.730541
65.866763
Standard Deviation
3.601713
9.366458
8.115834
Answer 2.
At individual stock level, Reynolds fluctuates more than Hasboro as it has higher Standard Deviation and higher variance. After calculating the portfolio of both the stocks, it gives us a different picture.
Looking at the numbers at portfolio level, Portfolio A which constitutes Reynolds still has a higher return(.587) but at a lower standard deviation (3.59) and variance (12.9), compared to Hasbro. This means that Reynolds when combined with S&P 500 is giving a higher return at the portfolio level but with a lower standard deviation and a lower variance when compared with the portfolio of S&P & Hasbro. It also means Reynolds is less risky than Hasbro when combined in a portfolio. Portfolio B (S&P+Hasboro) in this case seems more volatile than Portfolio A(S&P + Reynolds).We can also say that the variance which is measuring the risk involved was reduced by combining the stock in a portfolio.
Portfolio A (.99 S&P + .01 Reynolds)
Portfolio B (.99 S&P + .01 HASBRO)
Mean/Average
0.587338
0.580428
Variance
12.911939
13.085449
Standard Deviation
3.593319
3.617382
Answer 3.
Reynolds Beta =.7358 Hasbro Beta 1.4198
Calculating the Beta, Hasbro’s beta is more than 1, which means it’s more volatile than the market. We can also say its 42% more volatile than the market. Higher beta also offers a possibility of a higher rate of return but also with higher risk.
Reynolds has a beta of
Answer 1.
By comparing both the stocks, the riskiest stock in this case is Reynolds. It has the highest return as well as higher standard deviation and the higher variance. If we compare both stocks, Reynolds is riskier than Hasbro in this case. The higher variance indicates higher chance that the actual return on Reynolds will deviate from the expected return. S&P 500
REYNOLDS
HASBRO
Mean/Average
0.574333
1.874833
1.183833
Variance
12.972333
87.730541
65.866763
Standard Deviation
3.601713
9.366458
8.115834
Answer 2.
At individual stock level, Reynolds fluctuates more than Hasboro as it has higher Standard Deviation and higher variance. After calculating the portfolio of both the stocks, it gives us a different picture.
Looking at the numbers at portfolio level, Portfolio A which constitutes Reynolds still has a higher return(.587) but at a lower standard deviation (3.59) and variance (12.9), compared to Hasbro. This means that Reynolds when combined with S&P 500 is giving a higher return at the portfolio level but with a lower standard deviation and a lower variance when compared with the portfolio of S&P & Hasbro. It also means Reynolds is less risky than Hasbro when combined in a portfolio. Portfolio B (S&P+Hasboro) in this case seems more volatile than Portfolio A(S&P + Reynolds).We can also say that the variance which is measuring the risk involved was reduced by combining the stock in a portfolio.
Portfolio A (.99 S&P + .01 Reynolds)
Portfolio B (.99 S&P + .01 HASBRO)
Mean/Average
0.587338
0.580428
Variance
12.911939
13.085449
Standard Deviation
3.593319
3.617382
Answer 3.
Reynolds Beta =.7358 Hasbro Beta 1.4198
Calculating the Beta, Hasbro’s beta is more than 1, which means it’s more volatile than the market. We can also say its 42% more volatile than the market. Higher beta also offers a possibility of a higher rate of return but also with higher risk.
Reynolds has a beta of