The correlation between stocks A and B is the:
A) covariance between A and B divided by the standard deviation of A times the standard deviation of B.
B) standard deviation A divided by the standard deviation of B.
C) standard deviation of B divided by the covariance between A and B.
D) variance of A plus the variance of B dividend by the covariance.
E) None of these.

Question

Quizplus · Accepted Answer

The correlation between two variables, in this case stocks A and B, is defined as the covariance between them divided by the product of their standard deviations. Therefore, choice A is the correct formula for calculating correlation.

The Correlation Between Stocks a and B Is The