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 portfolios’ performances compare to the SP 500’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 must meet the following requirements:
• Be two or three pages in length for the analysis and explanations
• APA format
Include Excel spreadsheets with data, portfolios, and risk and return computations; these spreadsheets should be embedded in the Word