Suppose we are providing investment advice to Ms. Liu, who has some savings to invest. She has identified five stocks that she would be interested in investing in:
• Apple Inc. (AAPL)
• Amazon.com, Inc. (AMZN)
• Walt Disney Co. (DIS)
• Whole Foods Market, Inc. (WFM)
• Wal-Mart Stores, Inc. (WMT)
Ms. Liu is stumped by the question of how to allocate her
investment among these five stocks. She would like to maximize the annual return
and to minimize the risk. To help Ms. Liu, we collected data from Yahoo Finance on the
daily prices of the five stocks over a ten-year period, from 10/17/2005 to
10/15/2015. See the table below and the data file.
How would you help Ms. Liu choose her portfolio allocation?