Determine the relationship between risk and return by calculating stock and portfolio variance.

Risk and return are closely related concepts in the financial world as they both affect the performance of investments. Generally speaking, higher risk investments tend to have a greater potential for reward while lower risk investments provide more stability but with less upside. This relationship can be quantified using measures such as stock variance or portfolio variance which measure how much an individual stock or collection of stocks is expected to vary on average over time.

Stock variance helps investors understand the volatility associated with a particular stock by assessing its past performance, while portfolio variance provides insights into how risky a portfolio may be when compared to other portfolios. By calculating these figures, investors can determine the optimal balance between risk and return that meets their needs; this allows them to make informed decisions about where to allocate resources for maximum gains.

Overall, understanding the relationship between risk and return is essential for any successful investor. By taking advantage of metrics such as stock and portfolio variance, individuals can identify potential opportunities that meet their desired level of volatility while still providing returns that exceed expectations.