The variance of a portfolio of two investments will be equal to the sum of the variances of the two investments plus twice the covariance between the investments.

Covariance

A measure indicating the extent to which two random variables change together, where positive values indicate a positive relationship and negative values indicate a negative relationship.

Variances

A measure of the dispersion of a set of data points around their mean value, indicating how spread out the data points are.

Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including closed-end funds and exchange traded funds.