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I'm writing some C code to create different portfolios using a few stocks that are given as inputs. I am having some trouble trying to find if these results are correct. My biggest hesitation is that the are no data points in the bottom right quadrant of the graph. I would expect that there be more points with lower return but higher standard deviation.

Some notes: The x axis is standard deviation (weekly) The y axis is return (weekly)

The first graph is GOOG, VIX, TSLA enter image description here The second graph is GOOG, VIX, TSLA, BA enter image description here The third graph is GOOG, VIX, TSLA, BA, NFLX enter image description here

Obviously these stocks may not be the best combination in terms of covariance together. However the more stocks that I add to the portfolio the more of a cluster that it becomes.

So two questions:

  1. Do these graphs look like reasonable graphs?

  2. Why aren't there more points with a low return and high standard deviation?

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  1. Yes, your graphs look pretty reasonable to me.

  2. In general, you would expect returns to be increasing in standard deviation. Basically, the more risk you take on, there higher returns you require. This is why, in general, it is hard to find stocks with a lot of risk and very low returns. That is exactly what you see here.

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