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FIN 344 Test: Ch 5-6 3. Over the past four days, Stock X had returns of 3, 1,-3, -2, and 1 percent. At the same t had returns of 2A,-so, and-1. Treat the data as a sample. Compute and interpret the correlation coefficient of returns. Stock x 3 Stock Y 2 3 -5
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Answer #1

Hi,

Ive done the work in an excel, please have a look below. If you have any doubts please feel free to enter your questions in the comment section and I would clarify those for you.

Ans: Correlation coefficient = 0.789402522

Clipboard Font Alignment Number Styles B15 Stock Y- Stock X Mean Mean Stock X 3% 1% -3% -2% 1% Stock Y 2% 4% 5% 0% 1% X2 0.03

All excel formulas used:

Stock X - Mean Stock Y - Mean Stock X Stock Y X2 V2 (X*IY*) FA2-SC$9 A3-$C$9 A4-$C$9 A5-SC$9 A6-SC$9 B2-SC$10 C2A2 -C342 -84-

Have a good day!

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