Question

Closing prices of two stocks are recorded for 50 trading days. The sample standard deviation of stock X is 4.665 and the sample standard deviation of stock Y is 8.427. The sample covariance is $35.826.
Calculate the sample correlation coefficient. (Round your answer to 4 decimal places.)

Answer 1

Answer:

The sample correlation coefficient r = 0.9113

Step-by-step explanation:

In this question, we are interested in calculating the sample correlation coefficient.

From the question, we are given;

We are given that,

The sample standard deviation of stock X = 4.665

The sample standard deviation of stock Y = 8.427

The sample covariance = 35.826

Mathematically, the Pearson correlation coefficient "r", it is given as;

r = (co-variance of X and Y)/(standard deviation of X * Standard deviation of Y)

Inputing these values, we have;

r = (35.826)/(4.665 * 8.427) = 0.9113