Answer:
0.4110
Explanation:
The formula and computation of the correlation coefficient is shown below:
Correlation co-efficient = Covariance ÷ (Standard deviation of market × Standard deviation of Stock A)
where,
Covariance between the two = 0.0026
Variance of the stock A = 0.005
And, the variance of the market is 0.008
Now placing these values to the above formula
So, the correlation coefficient is
= 0.0026 ÷ (0.008 × 0.005)^0.50
= 0.0026 ÷ 0.006324555
= 0.411096096
= 0.4110
Hence, the correlation coefficient is 0.4110
