What Is the Correlation Coefficient for Two Assets with a Covariance

question 2

Multiple Choice

What is the correlation coefficient for two assets with a covariance of .0032, if asset 1 has a standard deviation of 12 percent and asset 2 has a standard deviation of 9 percent?

• A) 0.2963
• B) 0.3456
• C) 0.8721
• D) 1.5980

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Definitions:

Optimism

A mental attitude reflecting a belief or hope that the outcome of some specific endeavor, or outcomes in general, will be positive, favorable, and desirable.

Stress Mindset

A person’s belief or attitude towards stress, influencing how they perceive and react to stressful situations.

Behavioral Responses

The actions or reactions of an organism or system in response to stimuli or situations.

Stress-Induced

Refers to effects, responses, or conditions in the body or behavior that are directly caused by or heightened by stress.