In analyzing the S&P 500 and the XYZ Inc. in a five-year study, the covariance (S&P 500, XYZ Inc.) is 4,254.40. What kind of linear relationship does the S&P 500 and the XYZ Inc. have?
A) a negative linear relationship
B) a positive linear relationship
C) no linear relationship
D) a neutral linear relationship

Question

Quizplus · Accepted Answer

A positive covariance value indicates that the two variables move in the same direction, meaning as one variable increases, the other tends to increase as well, which defines a positive linear relationship.

In Analyzing the S&P 500 and the XYZ Inc