The following table shows a sample of historical total returns of shares in two different companies A and B.
Stock Returns  
Total effective annual returns  
Year  ##r_A##  ##r_B## 
2007  0.2  0.4 
2008  0.04  0.2 
2009  0.1  0.3 
2010  0.18  0.5 
What is the historical sample covariance (##\hat{\sigma}_{A,B}##) and correlation (##\rho_{A,B}##) of stock A and B's total effective annual returns?
Two risky stocks A and B comprise an equalweighted portfolio. The correlation between the stocks' returns is 70%.
If the variance of stock A's returns increases but the:
 Prices and expected returns of each stock stays the same,
 Variance of stock B's returns stays the same,
 Correlation of returns between the stocks stays the same.
Which of the following statements is NOT correct?
All things remaining equal, the higher the correlation of returns between two stocks:
Question 559 variance, standard deviation, covariance, correlation
Which of the following statements about standard statistical mathematics notation is NOT correct?
The covariance and correlation of two stocks X and Y's annual returns are calculated over a number of years. The units of the returns are in percent per annum ##(\% pa)##.
What are the units of the covariance ##(\sigma_{X,Y})## and correlation ##(\rho_{X,Y})## of returns respectively?
Hint: Visit Wikipedia to understand the difference between percentage points ##(\text{pp})## and percent ##(\%)##.
What is the covariance of a variable X with itself?
The cov(X, X) or ##\sigma_{X,X}## equals:
What is the covariance of a variable X with a constant C?
The cov(X, C) or ##\sigma_{X,C}## equals:
Question 988 variance, covariance, beta, CAPM, risk, no explanation
Price Data Time Series  
Sourced from Yahoo Finance Historical Price Data  
Date  S&P500 Index (^GSPC)  Apple (AAPL)  
Open  High  Low  Close  Adj close  Open  High  Low  Close  Adj close  
2007, Wed 3 Jan  1418  1429  1408  1417  1417  12.33  12.37  11.7  11.97  10.42  
2008, Wed 2 Jan  1468  1472  1442  1447  1447  28.47  28.61  27.51  27.83  24.22  
2009, Fri 2 Jan  903  935  899  932  932  12.27  13.01  12.17  12.96  11.28  
2010, Mon 4 Jan  1117  1134  1117  1133  1133  30.49  30.64  30.34  30.57  26.6  
Source: Yahoo Finance.  
Which of the following statements about the above table which is used to calculate Apple's equity beta is NOT correct?
Question 1005 variance, covariance, beta, CAPM, risk, no explanation
Price Data Time Series  
Sourced from Yahoo Finance Historical Price Data  
Date  Adjusted close  
S&P500 Index (^GSPC) 
Tesla (TSLA) 

2017, Fri 29 Dec  2673.61  62.27 
2018, Mon 31 Dec  2506.85  66.56 
2019, Tue 31 Dec  3230.78  83.67 
2020, Tue 31 Dec  3756.07  705.67 
Source: Yahoo Finance.  
Which of the following statements about the above table which is used to calculate Tesla's equity beta is NOT correct? Over the last 4 years the historical: