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You have three stocks you want to choose two stocks with diversified investment?

First let’s try to understand this question. In the below example ‘Stock diversification sample’ we have three stocks ‘Stock A’,’ Stock B’ and ‘Stock C’. You have decided to buy ‘Stock A’. Now you want to buy either ‘Stock B’ or ‘Stock C’ in such way that it should give you diversified portfolio. In short you want to find out which stock from ‘B’ and ‘C’ has no relation or least relation with ‘Stock A’. This can be achieved by using the ‘CORREL’ function. ‘CORREL’ takes two collection of values (in this case it is the stock values) and gives you a number between 1 to -1.  

Table: - CORREL values

So using the ‘CORREL’ function we get that stock A and stock B have a value of ‘-0.98’ and for stock A and C we have value of ‘0.89’. So stock A and stock B are more diversified than Stock A and Stock C.

Figure: - Stock diversification sample

Hard copy is hard copy.You can read it , experiment it , prepare notes and lot. So why read online samples when you can own a full copy for less than 4$ .Email [email protected]  to buy hard copy of the same. If you think the excel book can be improved please email the author at [email protected]
 

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