From the course: Excel for Investment Professionals

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Computing standard deviation and variance of a portfolio

Computing standard deviation and variance of a portfolio - Microsoft Excel Tutorial

From the course: Excel for Investment Professionals

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Computing standard deviation and variance of a portfolio

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- [Instructor] We've already seen how to calculate variance and standard deviation on a single asset, but most of the time we're interested in calculating variance and standard deviation on multiple assets, meaning on a portfolio that we're investing in. How do we do that? Let me show you. I'm in the zero three zero six begin Excel file. Now, in this case we've gone through and computed our covariances and our correlation for these two stocks, asset number one and asset number two, which have the returns that we see here. In order to get our portfolio variance though, we need to take into account the benefits that the diversification factor between these two stocks provides. So I'm going to need to go through and compute a few more things. I need to determine the arithmetic mean of each of these stocks. We've got it as 1.32 for asset number one. We are going to compute it briefly for asset number two. And that'll ensure that we have the correct covariance between our two assets. Now I…

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