If two assets have a zero correlation, their returns will:
A)always move in the same direction by the same amount.
B)always move in the same direction but not necessarily by the same amount.
C)move randomly and independently of each other.
D)always move in opposite directions but not necessarily by the same amount.
E)always move in opposite directions by the same amount.

Question

Quizplus · Accepted Answer

A zero correlation between two assets indicates that there is no linear relationship between their returns. Therefore, their returns will move randomly and independently of each other.

If Two Assets Have a Zero Correlation, Their Returns Will