The Figures Below Show Plots of Monthly Excess Returns for Two

The figures below show plots of monthly excess returns for two stocks plotted against excess returns for a market index. Which stock is likely to further reduce risk for an investor currently holding her portfolio in a well-diversified portfolio of common stock?

A) Stock A
B) Stock B
C) There is no difference between A or B.
D) The answer cannot be determined from the information given.

Correct Answer:

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