Covariance and Correlation Based on the following information, calculate the expected return and standard deviation of each of the following stocks. Assume each state of the economy is equally likely to happen. What are the covariance and correlation between the returns of the two stocks?
State of Economy | Return on Stock A | Return on Stock B |
Bear | .082 | –.065 |
Normal | .095 | .124 |
Bull | .063 | .185 |
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