Return on a Portfolio between, standard, expected, partially, following

anshultongia

I have two stocks - A and B. I know the following for each stock: expected return, standard deviation, and price per share. I also know the covariance between the two stocks.

How do I find the expected return and standard deviation of a portfolio that consists of 50 shares of stock A, partially financed by a short sale of 25 stocks of B?

Pegasus2008

Let's say Stock A's price is $5 while Stock B has a price of $2.

50 stocks A require investment of $250. We can get $50 by short selling Stock B.

Our total portfolio comprises of (+$250 & -$50) or weights of (+125% & -25%)

Using these weights, in addition to expected return, standard deviation, and covariances you can find expected return and standard deviation.

kickthatcfa

Thank you so much!