What is the hedge ratio for the given transaction

Reference no: EM13936416

You have a long position in Stock 1 and would like to hedge it using a three-month futures contract on Stock 2. A series of daily prices is provided below. What is the hedge ratio for this transaction?

Day	Stock 1	Stock 2
1	51.94	48.4
2	52.24	48.89
3	52.8	51.21
4	52.59	50.49
5	52.56	49.22
6	50.53	48.33
7	52.32	49.83
8	53.29	50.35
9	54.52	51.32
10	56.49	53
11	56.05	52.21
12	56.16	52.35
13	54.97	50.81
14	53.99	48.53
15	52.79	47.97
16	51.96	46.87
17	53.13	49.22
18	54.27	51.6
19	54.59	51.99
20	53.66	50.52
21	52.3	51.45
22	48.96	48.75
23	47.57	46.97
24	48.88	46.92
25	47.23	45.03

Reference no: EM13936416

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