Customer Service Chat
Get quote & make Payment
Co-relation, statistics, Basic Statistics
Co-relation in this case studies the behavior how each of the investment opportunity would react to any event vis – a vis each other. The same is measured in terms of co-relation coefficient. This gives the opportunity to the investor to diversify the investment and thus mitigate the risk.
Diversification is most effective when the correlation between the investments is –1 and it is least effective when the correlation is +1. As a result, if you want to reduce the risk of your portfolio as much as possible, you need to look for pairs of investments that have a correlation close to –1. A positive correlation means that two markets will move in tandem with each other. An up-move in one market will occur with an up-move in another market.
In our case correlation is 0.62 which is positive correlation indicating same direction for both markets. Thus investment in both markets will not help in reducing overall risk of portfolio.
Thus considering mean, standard deviation and correlation coefficient of both the markets it is advisable to invest in S&P market since it has positive rate of return with lower standard deviation. Further positive correlation coefficient does not suggest that diversification will result in reduction of risk.
Posted Date: 2/7/2012 2:12:52 AM | Location : United States
Ask an Expert
Co-relation, statistics, Assignment Help, Ask Question on Co-relation, statistics, Get Answer, Expert's Help, Co-relation, statistics Discussions
Write discussion on Co-relation, statistics
Your posts are moderated
Write your message here..
QNT/561, STAT QUESTION
Calculate the weighted average cost of capital, The Foschini Group has just...
The Foschini Group has just issued a batch of preference shares that will pay a constant dividend of R8, beginning 6 years from now. If the required rate of return is 8%, what does
Cash disbursements, Cash disbursements Cash disbursements are any or more ...
Cash disbursements Cash disbursements are any or more moneys [egg, checks: money: warrants: credit, debit card amounts: & EFTs [Electronic Fund Transfers) paid by the state during
Regression analysis, Regression line drawn as y=c+1075x, when x was 2, and ...
Regression line drawn as y=c+1075x, when x was 2, and y was 239, given that y intercept was 11. Caculate the residual
Ifrs financial instruments, journal entries of a loan swap with different c...
journal entries of a loan swap with different currency
What is meant by the full cost of a product, What is meant by the full cost...
What is meant by the full cost of a product? Many organizations use the expression top dollars to mean the complete creating or technology cost of a product. To this organiz
Research design, Hi there, I am designing a research study for my undergrad...
Hi there, I am designing a research study for my undergrad in Online Relationship. I am having some trouble with my professor accepting my proposed research model and survey questi
Marginal costing , HOW DO U CALCULATE VARIABLE SELLING AND ADMINISTRATIVE ...
HOW DO U CALCULATE VARIABLE SELLING AND ADMINISTRATIVE EXPENSES IF GIVEN MARKETING COSTS ADVERTSING P6000 PER MONTH SALES PERSONNEL SALARIES AND COMMISSION R 80000 PER MONTH PLUS
Who is APPROVING MANAGER , APPROVING MANAGER An individual within an agenc...
APPROVING MANAGER An individual within an agency who is responsible for assigning buy card custodians and developing buy card limits within the organization.
Application of statistics, Mention the characteristics of Statistics. Expla...
Mention the characteristics of Statistics. Explain any two applications of Statistics
Accounting Assignment Help
Economics Assignment Help
Finance Assignment Help
Statistics Assignment Help
Physics Assignment Help
Chemistry Assignment Help
Math Assignment Help
Biology Assignment Help
English Assignment Help
Management Assignment Help
Engineering Assignment Help
Programming Assignment Help
Computer Science Assignment Help
IT Courses and Help
Why Us ?
~24x7 hrs Support
~Quality of Work
~Time on Delivery
~Privacy of Work
Human Resource Management
Literature Review Writing Help
Follow Us |
T & C
Copyright by ExpertsMind IT Educational Pvt. Ltd.