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

Ascertainment bias, Ascertainment Bias A possible form of the bias, ma...

Ascertainment Bias A possible form of the bias, mainly in retrospective studies, which arises from a relationship amongst the exposure to the risk factor and the probability o

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

Aritmetic mean, merits and demerits of arithmetic mean

merits and demerits of arithmetic mean

Resolance tube , #questionw..what is ment by resolance tube

#questionw..what is ment by resolance tube

Acceptance region, Acceptance Region A term related with the statistical...

Acceptance Region A term related with the statistical signi?cance tests, which provides the set of values of a test statistic for which the null hypothesis cannot rejected. Supp

Chi-square Test, six subjects were exposed to 4 treatments and the followin...

six subjects were exposed to 4 treatments and the following data were recorded

Ms 4, 2. From the following cost, production and sales data of Decors Motor...

2. From the following cost, production and sales data of Decors Motor Ltd., prepare comparative income statement for three years under (i) absorption costing method, and (ii) margi

Quantitative Technic management, How has quantitative analysis changed the ...

How has quantitative analysis changed the current scenario in the management world today?

Hypothesis and statistical test, College administrators across the country...

College administrators across the country have become very concerned after noticing an increase in the number of deaths in college students from binge drinking.  Several psychologi

calculate the merger premium, Consider the following pre-merger informatio...

Consider the following pre-merger information concerning two firms, Mokhaba Manufacturers and Mabhida Merchants:  Data

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