You have observed the following quarterly returns for companies Humpty and Dumpty:

What is the correlation between the returns on the two companies?
A)-0.007
B)-0.333
C)-0.667
D)-0.894

Question

You have observed the following quarterly returns for companies Humpty and Dumpty:

What is the correlation between the returns on the two companies?
A)-0.007 
B)-0.333 
C)-0.667 
D)-0.894

Quizplus · Accepted Answer

The correlation between the returns on the two companies is calculated to be -0.894, which indicates a strong negative correlation between the two. This means that as one company's returns increase, the other company's returns are likely to decrease, and vice versa.

You Have Observed the Following Quarterly Returns for Companies Humpty