Consider the Characteristics of the Following Three Stocks: the Correlation

question 5

Multiple Choice

Consider the characteristics of the following three stocks: The correlation between Thumb Devices and Air Comfort is -0.12. The correlation between Thumb Devices and Sport Garb is 0.89. The correlation between Air Comfort and Sport Garb is -0.85. If you can pick only two stocks for your portfolio, which would you pick? Why?

• A) Combine Thumb Devices and Sport Garb because they have a high correlation.
• B) Combine Thumb Devices and Air Comfort because of high standard deviations.
• C) Combine Air Comfort and Sport Garb due to negative correlation.
• D) Combine Thumb Devices and Sport Garb because and Thumb Devices has the highest return and Sport Garb has the lowest standard deviation.

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Definitions:

Neural Impulse

The electrical signal transmitted along a neuron that allows for communication between neurons in the brain and nervous system.

Synaptic Gap

The tiny space between neurons, across which neurotransmitters travel to carry signals from one neuron to another.

Neurotransmitter

Chemical messengers that transmit signals across a chemical synapse, from one neuron to another, influencing various bodily functions.

Ion

An atom or molecule with a net electric charge due to the loss or gain of one or more electrons.