If two stocks are positively correlated, their covariance must also be positive.

Name: If two stocks are positively correlated, their covariance must also be positive.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

When two stocks are positively correlated, it means they move in the same direction relative to their means, which results in a positive covariance. Covariance measures how two variables change together, so if they tend to increase and decrease together (positive correlation), their covariance is positive.

If Two Stocks Are Positively Correlated, Their Covariance Must Also