For MAR and the NYSE index, determine the monthly average return on the share price, the related variance and standard deviation. What does the standard deviation measure? Compare the standard deviation and monthly average returns of the NYSE index and MAR. What do your calculations suggest about the relationship between risk and return? (12 marks)
Definition of 'Standard Deviation' A measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is calculated as the square root of variance
Investopedia explains 'Standard Deviation' Standard deviation is a statistical measurement that sheds light on historical volatility. For example, a volatile stock…show more content… Deviation | | | MAR | 1.6% | 0.7% | 8.3% | | | NYSE | 0.7% | 0.2% | 4.9% | | |
Calculate the covariance, and correlation between MAR and the NYSE index . What does correlation measure? Explain what your calculated correlation suggests about the relationship between MAR and the NYSE Index? Provide a correlation graph for MAR and NYSE. Based on your analysis, state whether you would prefer to invest in a single asset portfolio or construct a 2 asset portfolio? Include supporting examples to justify your answer. (20 marks)
The common usage of the word correlation refers to a relationship between two or more objects In statistics, the word correlation refers to the relationship between two variables. This focuses on measuring its strength, with the equation. Examples: one variable might be the number of hunters in a region and the other variable could be the deer population. Perhaps as the number of hunters increases, the deer population decreases. This is an example of a