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

Accounting Assumption, What are the consequences of non-compliance to each ...

What are the consequences of non-compliance to each accounting concepts?

Data for ogive graph, Data for ogive graph in sectors of indian economy

Data for ogive graph in sectors of indian economy

Calculates the value of variance and standard deviation, You are a psycholo...

You are a psychologist who has collected the subjective well-being scores of a number of elderly people aged 90 or above who are residents of an independent living facility or who

What is the tension in the upper string, Question: The weights shown in the...

Question: The weights shown in the figure are in equilibrium. It consists of objects held by vertical strings. The object 3 weighs 1.4 N. The horizontal bars are identical, uniform

Absorption costing and marginal costing, 2. From the following cost, produc...

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

Define mortality, Define Mortality: The following rates are used for measur...

Define Mortality: The following rates are used for measuring mortality. Crude death rate The annual crude death rate is defined as  Crude death rate = annual deaths / annual

Frequcency, how can we construct a bivariate frequency distribution

how can we construct a bivariate frequency distribution

Cluster sampling and area sampling, Cluster Sampling and Area Sampling: Clu...

Cluster Sampling and Area Sampling: Cluster sampling involves grouping the population and then selecting the group or the cluster rather than individual elements for inclusion in t

QUANTITATIVE METHODS., A LARGE SHIPPPING COMPANY RECORDED THE NUMBERS OF TO...

A LARGE SHIPPPING COMPANY RECORDED THE NUMBERS OF TONS SHIPPED WEEKLY ACROSS THE PACIFIC FOR 50 WEEKS. ARRANGE DATA IN A LESS THAN CUMULATIVE DISTRIBUTION USING SEVEN CLASSES OF E

Business forecasting, Ask questionmethods of business forecasting #Minimum...

Ask questionmethods of business forecasting #Minimum 100 words accepted#

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