Purchase Solution

Correlation Coefficient between Willow Stock and Sky Diamond Stock

Not what you're looking for?

Ask Custom Question

The variance of Willow is 0.2700, and the variance of Sky Diamond is 0.1300. The covariance of the returns between Willow Stock and Sky Diamond Stock is 0.0730. Calculate the correlation coefficient between the returns of the two stocks.

Purchase this Solution
Solution Summary

Calculating Correlation Coefficient between two stocks

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
Recent Feedback
  • "Your explanation to the answers were very helpful."
  • "What does 1 and 0 means in the repair column?"
  • "Went through all of the formulas, excellent work! This really helped me!"
  • "try others as well please"
  • "Thank you, this helped a lot. I was not sure how to plug in those numbers to a formula. This was a great help. Now I have to figure out how to explain cost of capital is used in net present value analysis, and how cost of capital is used in net present value analysis. This stuff gets confusing."
Purchase this Solution
Free BrainMass Quizzes
Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

View More Free Quizzes
Related BrainMass Solutions

  • Calculating variance of portfolio returns

    Weight of stock I=wa=0.6 Weight of stock J=wb=0.4 Standard deviation of stock I=si=10% Standard deviation of stock J=sj=20% Correlation coefficient between stock I and stock J=Corr(IJ)=1.0 Variance of portfolio=[(wi*si)^2 + (wj*sj)^2+2*(wi

  • Negative Correlation Coefficients

    Then the covariance between the two stocks are most probably positive and, in turn, the correlation coefficient also tend to be non-negative.

  • correlation coefficient

    213434 Two-Stock Portfolio: Correlation Coefficient For a two-stock portfolio, the maximum reduction in risk occurs when the correlation coefficient between the two stocks is what value?

  • tocks

    Draw (approximately) the feasible set, minimum-variance portfolio and efficient set when the correlation coefficient between A and B is (a) -1 and (b) +1. d. Suppose that the correlation coefficient between A and B was -1.

  • Calculate the volatilities

    We know the formula Beta = Coefficient of correlation between risky stock and market (rho-AM) * Standard deviation of stock A / Standard deviation of market Coefficient of correlation between risky stock and market (rho-AM) = Square root of Coefficient

  • Portfolio Return and Standard Deviation

    Calculate the standard deviation of a portfolio that is composed of 35 percent A and 65 percent B when the correlation coefficient between the returns on A and B is -0.6. c.

  • Risk and return on investment - Individual stocks and portfo

    c) Redo the calculations assuming that the correlation coefficient of the returns on the two stock is-0.6. What is the impact of this difference in the correlation coefficient?

  • Stocks X and Y have the following historical returns

    e) Calculate the correlation coefficient between the stocks in the portfolio. Please see the attached file Please see the attached file.

  • Hayacinth Macaw invests 60% of her funds in stock

    Correlation coefficient between stock I and stock J=Corr(PiPj) standard deviation of returns on I: si=10% = 0.1 standard deviation of returns on J: sj=20% = 0.2 Percentage invested in stock I = Pi = 0.6 Percentage invested in stock J= Pj = 0.4

View More Related Solutions