The case for diversifying across residential properties in London Coursework

The case for diversifying across residential properties in London - Coursework Example Average return as the percentage of the total returns is computed as (103.58/1243*100) = 8.33%. To calculate the percentage deviation from mean, you subtract the average return from the monthly returns for example in 2000, the total returns was $1404, the average return was $117. The month of january generated $100. To calculate the deviation, we subtract $117 from $100 to get a negative deviatio of $17 (-17). The percentage deviation is therefore calculated as (-17/1404*100) = -1.210826211% to 2 decimal places I get -1.21%. Note that: average return is only used to calculate the deviation in terms of returns but to calculate the % deviation, we devide the deviation return by the total returns then multiply by 100. Alternatively, we can calculate the average return as the percentage of total return as (117/1404*100) = 8.33% and take for example month of january, calculate its percentage of the total return as (100/1404*100) = 7.12% therefore, the % deviation is calculated as (7.21% - 8.33%) = -1.21% this is computed for the rest of the months to get the percentage deviations. Expected risk SD is = 0.5*0.35%+ 0.5*0.12 = 0.235%. This is the expected loss from the investment of choice. Therefore, whether an investor invests in Holland or south ken, the loss will be 0.235% of the total returns From the above data, that we have the same returns 8.33% but different risk level. Portfolios with more risk than others markets so invest in less risky investments (Baum & Hartzell, 2011). For instance, an investor can invest in south ken and Fulham. From the analysis, Chelsea residential market has the highest returns (profits) averagely $120 per month closely followed by ken/Holland with average return of $117 per month, then south ken with $104 per month then lastly Fulham with $103.58. on the other hand, Chelsea registered the highest possibility of a loss which is 0.51% of the total returns. Ken/Holland