The volatility of Home Depot share prices is 30% and that of General Motors shares is 30%.When I hold both stocks in my portfolio,the overall volatility of the portfolio is:
A)30%
B)26%
C)28%
D)20%
E)More information needed.

Question

Quizplus · Accepted Answer

The overall volatility of a portfolio depends not only on the individual volatilities of the stocks within it but also on the correlation between those stocks. Without information on the correlation coefficient between Home Depot and General Motors shares, it's impossible to accurately calculate the portfolio's volatility.

The Volatility of Home Depot Share Prices Is 30% and That