EXPECTED RISK CALCULATION
PORTFOLIO RISK = SQRT ((XX2*SDX2) + (XY2*SDY2) + (2*XX*XY* (rXY*SDX2*SDY2)))]
Where,
Xx, Xy = proportion of total portfolio invested in security X& Y respectively
sdx, sdy = standard deviation of stock X & stock Y respectively
rxy = correlation coefficient of x & y
PORTFOLIO RISK = SQRT ((XX2*SDX2) + (XY2*SDY2) + (2*XX*XY* (rXY*SDX2*SDY2)))]
Where,
Xx, Xy = proportion of total portfolio invested in security X& Y respectively
sdx, sdy = standard deviation of stock X & stock Y respectively
rxy = correlation coefficient of x & y