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

3-month absolute deviation, For our class homework we prepared a 3-month fo...

For our class homework we prepared a 3-month forecast for sales (12 months with actual sales for each month). What or how do we figure the absolute deviation of the 3-month foreast

Benefits of the study of accounting, reasons for studying accounting

reasons for studying accounting

How to solve assignment in economics, give me tricks to solve assignments i...

give me tricks to solve assignments in economcis

Confidence interval, 1. Provide an overview of the scenario and the variabl...

1. Provide an overview of the scenario and the variable involved. Include an explanation of why and how constructing the confidence interval adds value. I.e., why might this inform

N345, An HIV educator wishes to determine whether the method of delivering ...

An HIV educator wishes to determine whether the method of delivering teaching influences adherence with antiretroviral therapy. She decides to measure adherence as viral load (a r

Disadvantages of quantatity tecqines.., what are the disadvantages of quant...

what are the disadvantages of quantatity tecqines..

Co-relation, Co-relation: Co-relation in this case studies the behavior how...

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

Accounting standards in canada, Accounting Standards in  Canada:  : In...

Accounting Standards in  Canada:  : In 2005, the Accounting Standards Board in Canada promoted the use of IFRS over the use of GAAP. The companies of Canada are supposed to ad

Cost accounting, Assignment on objective of cost accounting briefly discuss...

Assignment on objective of cost accounting briefly discuss.

Cosumer behaviour, consumer behaviour in accounting

consumer behaviour in accounting

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