Wealth Management Blog | WrapManager (39)

Adding an Asset to Your Portfolio - Doug's Quiz Corner

Posted by Doug Hutchinson | CFA®, Director of Research and Trading

May 13, 2015

Adding an Asset to Your Portfolio - Doug's Quiz Corner

Quizmaster, Doug Hutchinson, has come up with a great quiz that illustrates how adding an asset with higher volatility can actually lower overall volatility of a portfolio. Let’s see what the math has to say.

Good luck!

Consider this scenario:

Your friend Mary has a portfolio consisting of one asset, Asset A. She is considering adding a second asset to the portfolio and her new portfolio would be weighted as 50% Asset A and 50% of the new asset.

She would like the new two asset portfolio to have the lowest risk (as measured by standard deviation) possible, given the other options that she is considering adding to her portfolio: Asset B and Asset C.

[+] Read More

Investment Planning Portfolio Strategy Doug's Quiz Corner

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