Three portfolios are created using shares of Stock A and Stock B. The table below provides the proportional value of the two stocks in each portfolio, as well as the volatility of each portfolio. Find the correlation between the returns of Stock A and Stock B. Proportion of A Proportion of B Volatility Portfolio 1 40% 60% 31.65% Portfolio 2 20% 80% 26.17% Portfolio 3 70% 30% 42.17%

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
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Chapter4: Equations Of Linear Functions
Section4.5: Correlation And Causation
Problem 15PPS
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Three portfolios are created using shares of Stock A and Stock B. The table below
provides the proportional value of the two stocks in each portfolio, as well as the
volatility of each portfolio. Find the correlation between the returns of Stock A and
Stock B.
Proportion of A Proportion of B Volatility
Portfolio 1
40%
60%
31.65%
Portfolio 2
20%
80%
26.17%
Portfolio 3
70%
30%
42.17%
Transcribed Image Text:Three portfolios are created using shares of Stock A and Stock B. The table below provides the proportional value of the two stocks in each portfolio, as well as the volatility of each portfolio. Find the correlation between the returns of Stock A and Stock B. Proportion of A Proportion of B Volatility Portfolio 1 40% 60% 31.65% Portfolio 2 20% 80% 26.17% Portfolio 3 70% 30% 42.17%
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