User Account

All Pages

Co-relation, statistics, Basic Statistics

Assignment Help:
Co-relation:
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.

Related Discussions:- Co-relation, statistics

Statistics in plural and singular form, how to deffine statistics in plura...

how to deffine statistics in plural and singilar form

Business valuation to determine the stock price of an entity, Definition of...

Definition of business valuation to determine the stock price of an entity. Business valuation is the value or price where a unit would be purchased at a given point in time. Usual

Determine the probability of coding region , Using 1 st order models shown...

Using 1 st order models shown in homework 2 solution determine the probability of coding region in frame two for DNA fragment AGTAGCTTCCAG. Use only parameters provided in the hom

Word problem, Suppose that cars pass a certain toll booth at an average rat...

Suppose that cars pass a certain toll booth at an average rate of 10 cars per minute between the hours of 7 a.m. and 9 a.m. The random variable X counts the number of cars that pas

Transition towards ifrs, Transition towards IFRS Over the last few year...

Transition towards IFRS Over the last few years, there has been a tremendous change in the world's capital markets. There has thus been a shift away from the local financial re

Factor reversal test, factor reversal test or circfied ular test satis reve...

factor reversal test or circfied ular test satis reversal test question #Minimum 100 words accepted#

Measure of dispersion, finding combine mean and standard deviation?

finding combine mean and standard deviation?

Capital assets, Capital assets Assets which meet the state''s capitalizati...

Capital assets Assets which meet the state''s capitalization strategy such as ground: developments to l&: easements: buildings: leasehold improvements: means of transportation: or

Do a full regression analysis , #questioAssessment Part 2 (70%) You may un...

#questioAssessment Part 2 (70%) You may undertake the analysis of one of the following three case studies: (a) Crime (Minitab project file: CRIM

Random varisble, what is random variable

what is random variable

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd