Asked by
Olivier Fleury
on Nov 04, 2024Verified
A statistic that measures how the returns of two risky assets move together is:
A) variance.
B) standard deviation.
C) covariance.
D) correlation.
E) covariance and correlation.
Covariance
A statistical measure that calculates the degree to which two variables move in relation to each other.
Correlation
The statistical measure of how two securities move in relation to each other, ranging from -1 to +1.
Risky Assets
Financial instruments that carry a higher degree of risk compared to risk-free assets, potentially leading to higher returns or losses.
- Comprehend the function of correlation and covariance in minimizing portfolio risk and enhancing optimization.
Verified Answer
MV
Learning Objectives
- Comprehend the function of correlation and covariance in minimizing portfolio risk and enhancing optimization.
Related questions
Which of the Following Statement(s) Is(are) True Regarding the Variance ...
Which of the Following Statement(s) Is(are) False Regarding the Variance ...
What Is the Covariance Between the Two Assets
The Covariance Between These Two Assets Indicates That ________ ...
What Is the Standard Deviation of a Portfolio of Two ...