I have 4 investments:
| Weight | Expected Return | Standard Deviation | |
| Small-Cap Growth Stock | 25% | 10% | 9.37% |
| Large-Cap Value Stock | 35% | 5% | 14.52% |
| Foreign Stock | 10% | 5% | 10.59% |
| Treasury Bond | 30% | 5% | 6.22% |
The correlation between:
| Small-Cap & Large Cap | 0.93 |
| Small-Cap & Foreign | 0.93 |
| Small-Cap & Treasury Bond | – 0.96 |
| Large-Cap & Foreign | 1 |
| Large-Cap & Treasury Bond | – 0.99 |
| Foreign & Treasury Bond | – 0.99 |
How to rebalance this allocation?
Assume I have $100,000, I want to invest for long term. So, I created an aggressive portfolio with four assets – small cap (25%), large cap (35%), foreign stock (10%), and treasury bond (30%).After calculating the Expected Return and Stadard deviation, the large cap has the highest risk.So, should I change my asset allocation such as the percentage of each investment or invest one more class (cash or real eastate) or shift the time horizon?
