Question by elspringster: THe real meaning of covariance please?
If I have an investment X, for which the return is R(x), and the return of the market portfolio is R(m). What do you mean when you are trying to find out the covariance between these two returns?
Answer
Answer by financegal27Covariance is a measure of the degree to which returns on two assets move in tandem. A positive covariance means that asset returns move together. A negative covariance means returns move inversely.
Basically its
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