Charles Griffith makes quarterly bets between stocks of industrial and utility sectors. Griffith’s strategy has an annualized active risk of 18%. Based on the information below, If Griffith wants to limit his active risk to 6%, what is the allocation to Utility sector when Griffith is bullish about Industrial stocks?
Benchmark** Weight**
Industrial80%
Utility20%
Answer is -13%…
PLEASE EXPLAIN HOW