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

Normal distribution, For a normal distribution why do we calculate the prob...

For a normal distribution why do we calculate the probability of a range of numbers instead of the probability of a single number?

Population sample means on excel, making sample means ,propotions,slopes o...

making sample means ,propotions,slopes on excell

Average Speed in Various Cases, Define Average Speed in Various Cases (a) ...

Define Average Speed in Various Cases (a) Particles covering different distances in different times say a particle covers s1 distance in time t1 ,s2 in time t2, s3 in time t3 and

Icmap, 03 (a) Explain the term capital rationing and suggest the criteria t...

03 (a) Explain the term capital rationing and suggest the criteria to be used in ranking projects under capital rationing. (05) (b) There are three projects X Y and Z having follow

Calculate the npv of machine, Kenneth Su Gold Corp (KSGC) is considering th...

Kenneth Su Gold Corp (KSGC) is considering the purchase of a new piece of machinery. The new machinery would cost $80,000. You are given the following facts: The new machine

Discuss single control chart , Question 1 A courier company conducted ...

Question 1 A courier company conducted a brainstorming session amongst drivers to ascertain the reasons why it was unable to deliver items to households, always right first ti

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

Data for ogive graph in sectors of indian economy

Why is interest expense a no operating expense, Why is interest expense a n...

Why is interest expense a no operating expense? Attention cost is a no operating cost when it is not part of a business's primary functions. For example, a store's primary func

Measures of central tendency, List down various measures of central tendenc...

List down various measures of central tendency and explain the difference between them?

SPSS EXERCISES, IF PUNDIT 2 IS CORRECT, FEMROLE WILL HAVE (CIRCLE ONE)

IF PUNDIT 2 IS CORRECT, FEMROLE WILL HAVE (CIRCLE ONE)

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