Tuesday, 21 June 2011

Q&A: How do i calculate the covariance between 2 risky assets?

Question by Life: How do i calculate the covariance between 2 risky assets?
There are two assets: A and B. If I have the correlation between the two, the standard deviation of A, and the standard deviation of B then can I calculate the covariance between A and B. Is the covariance equivalent to the correlation*standard deviation A* standard deviation B?


Answer
Answer by John WHave you tried using the COVAR() function in Excel?

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