What can cause the correlation of two or more stocks to increase dramatically?
What can cause the correlation of two or more stocks to increase dramatically?
Homework Answers
This generally happens in Oligopolistic market when one player sets industry benchmark prices and other players follow it.
For example, Sprint Telecom increases its base price from 40dollars to 50 dollars which has been rock bottom industry price. Then it shall lead other players who already charge premium, to increase prices in equivalent margin by Sprint.
Hence players like AT&T, Tmobile, Verizon all shall increase prices which will boost their Ebitda and Net profits Hence stock price increase of Sprint shall cause increase in stock prices of other players as well.
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What can cause the correlation of two or more stocks to increase
dramatically?
what happened to two stocks when correlation become high?
what happened to two stocks when correlation become high?
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Question 1 gives you the information of the stocks and their correlation, which will be used...
Question 1 gives you the information of the stocks and their correlation, which will be used in many of the following questions. James, a portfolio manager, would like to form the following portfolio between Microsoft and Coca-Cola: Expected return (%) Standard Deviation (%) Weight Microsoft 28 42 0.4 Coca-Cola 12.5 21 0.6 The correlation between the two stocks is -0.2. What is the standard deviation of the portfolio? ______%
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