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

Calculate profitability index of project, Your division has been allocated ...

Your division has been allocated $15M for capital projects for the coming year. You've been able to identify five potential projects, as outlined in the table below, each of which

Modules of probability and statistics, Question: (a) Suppose that 100 t...

Question: (a) Suppose that 100 tires made by Bridgestone last on average 21,819 miles with a standard deviation of 1,295 miles. Test the null hypothesis µ = 22, 000 miles again

Absorption overheads, Give a brief discussion of the existing traditional ...

Give a brief discussion of the existing traditional method of absorbing overheads

Statistic, difference between histogram and historigram

difference between histogram and historigram

Probability, A certain manufactured item is visually inspected by two diffe...

A certain manufactured item is visually inspected by two different inspectors. When a defective item comes through the line, the probability that it gets by the first inspector is

Index, where i found an assignment about index?

where i found an assignment about index?

Introduction to statistical methods in psychology, you are studying the rel...

you are studying the relationship between the number of academic credit hours graduate students spent studying Multicultural Counseling Skills and their current clients' overall pe

Estimate of the population mean time, The average cost per night of a hotel...

The average cost per night of a hotel room in New York City is $273 (SmartMoney, March 2009). Assume this estimate is based on a sample of 45 hotels and that the sample standard

Electromagnetic induction, what are the projects elctromagnetic induction?

what are the projects elctromagnetic induction?

Agency funds, Agency funds,define it Organization money is used to account ...

Agency funds,define it Organization money is used to account for the resources presented by the state as an agent for individuals, private companies, and other health systems. Orga

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