He has three options in front of him:Stocks of Company X, which gives him an expected return (Mean) of 15 % with volatility (S.D) of 11%.Exchange Trade Fund (ETF) which offers an expected return (Mean) of 14% with volatility (S.D) of 8%.Bonds with an expected return (Mean) of 4% with 3% volatility (S.D). Treating you as a financial expert, suggest a most suitable investment for the person using Coefficient of Variation.
Tracking error is the divergence between the price behavior of a position or a portfolio and the price behavior of a benchmark. This is often in the context of a hedge fund, mutual fund, or exchange-traded fund (ETF) that did not work as effectively as intended, creating an unexpected profit or loss.
Tracking error is reported as a standard deviation percentage difference, which reports the difference between the return an investor receives and that of the benchmark they were attempting to imitate.