what happened to two stocks when correlation become high?
If the correlation between two stocks is very high where it can be either positively correlated or negatively correlated and in this regard what happens is that when the price of one stock increases the price of other also increases in the same proportion nearly if they are highly correlated in a positive mannerwhat is the price of one stock increases then the price of other stock decreases in nearly the same proportion when they are highly negatively correlated and this means they are highly dependent on each other
What will happened to the demand for chocolate candy bars when more people decide to become vegan?
What can cause the correlation of two or more stocks to increase dramatically?
1. Suppose there is a negative correlation (-0.8) between the two risky assets (LARGE stocks and SMALL stocks). Will the variance of the minimum-variance portfolio increase, stay the same, or decrease when we switch from a correlation of 0.4 to a negative correlation of -0.8?
Question 1 gives you the information of the stocks and their correlation, which will be used in many of the following questions. James, a portfolio manager, would like to form the following portfolio between Microsoft and Coca-Cola: Expected return (%) Standard Deviation (%) Weight Microsoft 28 42 0.4 Coca-Cola 12.5 21 0.6 The correlation between the two stocks is 0.5. What is the expected return of the portfolio? ______% Now, suppose the correlation between the two stocks...
2. Two stocks have the following returns. What is their correlation? Year Stock A Stock B 2010 8.00% -8.00% 2011 9.00% -9.00% 2012 10.00% -10.00% 2013 12.00% -12.00% 2014 14.00% -14.00% 2015 16.00% -16.00% A. -1.00 B. 1.00 C. 0.00 D. -.23
Question 1 gives you the information of the stocks and their correlation, which will be used in many of the following questions. James, a portfolio manager, would like to form the following portfolio between Microsoft and Coca-Cola: Expected return (%) Standard Deviation (%) Weight Microsoft 28 42 0.4 Coca-Cola 12.5 21 0.6 The correlation between the two stocks is -0.2. What is the standard deviation of the portfolio? ______%
Calculate the correlation of the two stocks below based on the scenario forecasts given: Probability Atlantis Co. Baltazaar Inc. Boom 0.3 6 14% Normal 0.6 4 4% Bust 0.1 -10% -6% Provide your answer in decimals, rounded to two decimals.
Question 1 gives you the information of the stocks and their correlation, which will be used in many of the following questions. James, a portfolio manager, would like to form the following portfolio between Microsoft and Coca-Cola: Expected return (%) Standard Deviation (%) Weight Microsoft 28 42 0.4 Coca-Cola 12.5 21 0.6 The correlation between the two stocks is 0.5. What is the expected return of the portfolio? ______% Rachel, James’ wife, suggests a portfolio which consists...
Which of the following statements about any two stocks is correct? Group of answer choices a. Diversification benefits can be achieved as long as the two stocks have a correlation less than one. b. Diversification benefits can be achieved only when their correlation is less than zero. c. Diversification benefits can be achieved only when their correlation is negative one. d. Diversification benefits can always be achieved between two assets.
Question 1 gives you the information of the stocks and their correlation, which will be used in many of the following questions. James, a portfolio manager, would like to form the following portfolio between Microsoft and Coca-Cola: Expected return (%) Standard Deviation (%) Weight Microsoft 28 42 0.4 Coca-Cola 12.5 21 0.6 The correlation between the two stocks is 0.5. What is the expected return and standard deviation of the portfolio?