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, example of descriptive and inferential statistics?

example of descriptive and inferential statistics?

ACC 557, Glaser Services acquired 30% of the outstanding common stock of Ni...

Glaser Services acquired 30% of the outstanding common stock of Nickels Company on January 1, 2008, by paying $800,000 for the 45,000 shares. Nickels declared and paid $0.30 per sh

Derive the pure strategy nash equilibrium, There are two firms competing in...

There are two firms competing in quantity. Firm 1 and 2 set their quantities supplied, q1 and q2, respectively. The production costs are zero. The market price is given by

Compute the sample correlation matrix, 1 Compute SX; SXY ; and SY . > # Put...

1 Compute SX; SXY ; and SY . > # Put your R code here. 2 Compute the sample correlation matrix (q_p) between the X and Y variables. Test individual correlations for significance

Examine group profiles and report the descriptive statistic, Use your data ...

Use your data to perform the following tasks. 1.  Based on the variables, construct a design that consists only main effects of one categorical IV and at least two continuous DV

Historigram and histogram, difference between historigram and histogram?

difference between historigram and histogram?

Frequency distribution, What happens to the arithmetic mean when you add th...

What happens to the arithmetic mean when you add the same number to all the scores of the distribution?

Magnetic susceptibility experiment, . Good day, Using 4-inch pole caps and ...

. Good day, Using 4-inch pole caps and a Mettler M5 balance, I got all the values required in order to calculate the magnetic susceptibility of several inorganic compounds such as

Salient features of a promissory note, What are the salient features of a P...

What are the salient features of a Promissory Note? Ans. a) A Promissory Note is made by the promiser who undertakes to pay the mentioned amount of Bill to the bearer of the Promi

Statistical inference, A study was conducted at a major north-eastern Ameri...

A study was conducted at a major north-eastern American medical centre regarding blood cholesterol levels and heart-attack incidents. A total of 28 heart-attack patients had their

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