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

Job cost sheet, Manchester Custom Fabricating Company uses a job order syst...

Manchester Custom Fabricating Company uses a job order system. At the beginning of May, Manchester had two jobs in process, Job #22 (DM = $600 and DL = $780), and Job #23 (DM = $75

Frequency distribution & graphical distribution, assignment

assignment

Determine the cutoff score to indicate a score, What would be the cutoff sc...

What would be the cutoff score to indicate a score that is in the top 15% of the scores on a test with a mean of 100 and a standard deviation of 15?

Kolmogorov test, how can i get a free software to run a kolmogorov test?

how can i get a free software to run a kolmogorov test?

Structural analysis and probability , 1.) Consider two chains R and S, each...

1.) Consider two chains R and S, each having 3 and 6 links respectively. Each link's resisting strength is normally distributed with a mean of 60,000 psi and standard deviation of

Wae optic, can we polarize sunlight by the help of Polaroid disc?

can we polarize sunlight by the help of Polaroid disc?

Acc, Project I The trial balance of the Parton Wholesale Company contain...

Project I The trial balance of the Parton Wholesale Company contained the following accounts at December 31, 2010 the end of the company’s calendar year. PARTON WHOLESALE COMPA

Assignment, All Excel output should be copied into a single Word document w...

All Excel output should be copied into a single Word document where you must enter all of your responses to the questions below. Format the document professionally so it flows well

Probability, Consider the two events A and B with P(A) = 0.4 and P(B) = 0.3...

Consider the two events A and B with P(A) = 0.4 and P(B) = 0.3. (a) If A and B are independent then compute the probability that Both A and B happen

FIFO, how to figure out cost of good available for sale, cost of sales, end...

how to figure out cost of good available for sale, cost of sales, ending inventory

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