Security Analysis and Portfolio Management Essay - 2

Security Analysis and Portfolio Management - Essay Example Based on the same concept, the following paper aims at establishing the value of stocks from capitalized companies, Exxon and Berkshire, in a given portfolio. The analysis of the two stocks in this paper is achieved through a methodology section, results, and a concluding remark. In order to accomplish the main objective of this paper, two firms with capitalized stocks were selected: Exxon and Berkshire. The stocks of Exxon and Berkshire were the main data to be used in analysis and discussions. 10-years (from 2003 to 2013) of monthly stock price history for both Exxon and Berkshire were obtained from Yahoo Finance. Time series of monthly returns were then obtained from the time series of the monthly stock prices. On the basis of the time series of monthly returns, annualized mean return, standard deviation and correlation of the stocks were calculated. In addition, the analysis also calculated the weights on the minimum variance portfolio that consisted of the stocks from Exxon and Berkshire. Data and results were presented using tables and graphs. The data and results were used in carrying out the analysis and drawing up the conclusion. The 10-years of monthly stock price history for both Exxon and Berkshire obtained from Yahoo Finance are included in Excel file attached. From the monthly stock prices, the monthly returns were established. The results of the monthly returns established from the monthly stock prices are illustrated in Figs. 1 and 2 through the use of a time series graph. In addition to obtaining the returns and illustrating them in the above graphs, the calculated annualized mean return, standard deviation, and correlation of the stocks are illustrated in the following tables. From the above table, the E(R) monthly for Exxon Mobil Corporation is larger than the E(R) monthly for Berkshire Hathaway Incorporation, that is, 1.11% against 0.79%. However, on the