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QUESTION 15 If the covariance of stock 1 with stock 2 is - .0065, then what is the covariance of stock 2 with stock 1? O-0065
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Answer #1

If the covariance of stock 1 and stock 2 is -.0065, then the covariance of stock 2 with stock 1 is also -.0065

Cov(S1, S2)= [∑(ReturnS1​ − AverageS1​) ∗ (ReturnS2​ − AverageS2)​]/N

Similarly,

Cov(S2, S1)= [∑(ReturnS2 − AverageS2) ∗ (ReturnS1 − AverageS1)​]/N

The answer would be same.

Thus the right answer is -.0065

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