Goal

Visualize expected returns and risk to make it easier to compare the performance of multiple assets and portfolios.

Choose your stocks.

from 2012-12-31 to 2017-12-31

1 Import stock prices

2 Convert prices to returns

3 Assign a weight to each asset

4 Build a portfolio

## # A tibble: 60 × 2
##    date        returns
##    <date>        <dbl>
##  1 2013-01-31  0.0595 
##  2 2013-02-28 -0.00259
##  3 2013-03-28  0.0284 
##  4 2013-04-30  0.0954 
##  5 2013-05-31  0.181  
##  6 2013-06-28  0.0455 
##  7 2013-07-31  0.0992 
##  8 2013-08-30  0.0204 
##  9 2013-09-30  0.104  
## 10 2013-10-31  0.0313 
## # ℹ 50 more rows

5 Compute Standard Deviation

## # A tibble: 1 × 2
##   Stdev tq_sd
##   <dbl> <dbl>
## 1 0.056   5.6

6 Plot

Question

How should you expect your portfolio to perform relative to its assets in the portfolio? Would you invest all your money in any of the individual stocks instead of the portfolio? Discuss both in terms of expected return and risk.

Looking at my three investments Toyota, Amazon, and Tesla we can see that their risk vs value are all very different. Toyota is not valatile but returns a low percentage, Amazon is a touch more volatile but still is a safe investment that has a higher return, and Tesla is very volatile but it reutuns much higher than the other two at almost 4 percent. My portfolio is in a great spot of that graph. I LOVE IT. My portfolio is not volatile and has a good return on investment. I would personally not invest all my money into one of these stocks and instead keep my portfolio the way it is. I have 50 percent of my money in Amazon, and 25 percent in both Tesla and Toyota. Toyota being non valatile and producing a return evens out the risk that Tesla gives me while Amazon performs near my portfolio. If Telsa has a good year my portfolio will see high returns.