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Olivier Fleury
on Nov 04, 2024

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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.
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Michele VelezNov 06, 2024
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