Risk and performance evaluation of a portfolio composed of two assets: An application for the shares of McDonald's Corporation and Nike, Inc.
DOI:
https://doi.org/10.5377/reice.v7i13.8169Keywords:
Portfolios, risk, yield, variance, standard deviation, coefficient of variation, performance index, covariance and correlationAbstract
The creation of investment portfolios through the process of diversification, makes effective the optimization of risk and performance. The objective of this work consisted in the creation of portfolios composed of the shares of McDonald's and Nike, Inc., with the purpose of obtaining the greatest benefit at the lowest possible risk. To determine the risk and performance of the assets, statistical techniques were used such as the mean or average, range, variance, standard deviation and the coefficient of variation of the individual assets. The results obtained showed that the performance of the minimum variance and maximum performance portfolios were similar, being 1.54% and 1.55% respectively. Similarly, in terms of risk being 3.41% and 3.42% for the portfolio of minimum variance and maximum performance, respectively, measured through the standard deviation. As for the coefficient of variation, the result obtained by the minimum variance portfolio was 2.22 while the maximum performance obtained a value of 2.21. Given the similarities of both portfolios, the investment decision will depend on the level of risk that the investor is willing to accept and opt for the minimum variance or maximum performance portfolio.
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