You are creating a two-risky asset portfolio. The table below listed information regarding three potential...
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You are creating a two-risky asset portfolio. The table below listed information regarding three potential candidates. If you have already decided to invest in Asset 1, which of Asset 2 and Asset 3 should you pick to compete your portfolio so that your portfolio has a better risk-return tradeoff?
|
| Asset 1 | Asset 2 | Asset 3 |
| Mean | 10% | 16% | 16% |
| Standard Deviation | 12% | 20% | 20% |
| Correlation with Asset 1 |
| 0.8 | 0.9 |
You should choose the asset whose correlation with Asset 1 is ________.
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