Provide complete write up of the portfolio formation in a Word file, with calculations copied and pasted in it from the Excel file.
1. Use the stocks of three publicly traded companies which is Apple, Netflix, Boeing. State the criteria on picking apple, Netflix and Boeing.
2. Retrieve monthly data on adjusted closing prices of your securities from Yahoo Finance for the year 2018 and calculate the monthly rate of return of the stocks for every month.
3. Calculate the mean, variance, and standard deviation of the stocksâ€ monthly returns.
4. Calculate the correlation coefficient between every possible pair of stocksâ€ returns.
5. Decide what percentage of your money (weights) you want to invest in each stock and state the criteria you used to select those weights.
6. Now calculate your portfolioâ€s mean monthly return, variance, and standard deviation.
7. Assuming your portfolio return follows a normal distribution, calculate the chance that your portfolio loses 10% of its value during any month?
8. Assuming you have invested $100,000 in your portfolio, what is value at risk (VaR) of your portfolio at any particular month at 99% confidence level?
9. Now randomly change your portfolioâ€s weights 100 times (note total weights should always be 100%), for each weight combination calculate the mean and standard deviation of your portfolio, and then draw the efficient frontier.
10. For each item mentioned above explain your rationale and cite peer-reviewed and/or seminal sources.
Provide at least 6 APA peer reviewed reference, please provide detailed definitions for all the terms in the assignment.
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