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

Statement, prof. ya-lu-chan definitions statistices

prof. ya-lu-chan definitions statistices

Discrete random variable, ABC company has 2000 accounts receivable. The mea...

ABC company has 2000 accounts receivable. The mean and standard deviation are $300 and $50, respectively. Assume that the accounts are normally distributed.

Characteristics of data in statistics, Important Characteristics of Data ...

Important Characteristics of Data Center - The representative or average value which indicates where the middle of the data is located.   Variation - the measur

Homework, I will need to upload the question sheets.

I will need to upload the question sheets.

Conversion bonds, i need problems and their answers in a simplified way to ...

i need problems and their answers in a simplified way to understand the material because im really having troubles understanding how to solve conversion bonds and share warrants pr

General linear regression model, find the variance of least square estimato...

find the variance of least square estimator beta hat for general linear regression model

Elaborate accounting procedures , All procedures that discover, recognize h...

All procedures that discover, recognize history, move, sustain, and review economical information to either generate economical statements or to provide inner control.

Estimate the expected monetary value, 3DP, a Luxembourg-based company plans...

3DP, a Luxembourg-based company plans to develop and sell highly specialized 3D printers. The cost of product development is estimated at EUR 50,000.-, irrespective of whether or n

Analysis of variance, purpose?

purpose?

What is budget control, Definition of budget control as management of costs...

Definition of budget control as management of costs & expenses with examples. Budget control is the management of costs & expenses in accordance with an underlying budget.

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