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

Cost, I am struggling in my cost accounting class and I need help

I am struggling in my cost accounting class and I need help

Statistical inference, A study was conducted at a major north-eastern Ameri...

A study was conducted at a major north-eastern American medical centre regarding blood cholesterol levels and heart-attack incidents. A total of 28 heart-attack patients had their

Discrete Standard Deviation, Discrete Standard Deviation For calculating s...

Discrete Standard Deviation For calculating standard deviation in discrete series any of the following methods may be applied (1) Actual mean method. (2) Assumed mean method. (

Time series, what is meant by time series?

what is meant by time series?

Compute the z scores, 1. Compute the z scores for the following raw scores ...

1. Compute the z scores for the following raw scores where   = 78 and the standard deviation = 4. a. 72 b. 82 c. 78 d. 87 e. 71

Capital outlays, Capital outlays A budgetary, financial reporting term to ...

Capital outlays A budgetary, financial reporting term to end out the expenditures for the acquisition of: addition to:, chief repair of capital assets intended to advantage prospe

Acct 1100, comprehensive problem 1 chapter4

comprehensive problem 1 chapter4

Statistical method, advantages of statistical method

advantages of statistical method

Atomistic fallacy, Atomistic fallacy The fallacy which arises because of...

Atomistic fallacy The fallacy which arises because of the association amongst the two variables at the individual level might differ from the association between the similar two

Linearity, The weight in Kg for each person was matched to their intake of ...

The weight in Kg for each person was matched to their intake of fat per day in Grams.  9 people were selected with the following results. Weight (Xi)         Fat (Yi) 45

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