Answer:
a) The correlation coeffcient is given by:
And replacing we got:
b) For this case we can conclude that we have a strong, negative linear association between the two stock prices.
Explanation:
Part a
For this case we have the following info:
represent the sample deviation for the variable X
represent the sample deviation for the variable Y
represent the covariance between the variables X and Y
The correlation coeffcient is given by:
And replacing we got:
Part b
Describe the relationship between prices of these two stocks.
For this case we can conclude that we have a strong, negative linear association between the two stock prices.