Stock A’s returns the past 5 years have been 10%, -15%, 35%, 10%, and -20%. Stoc

Question

Stock A’s returns the past 5 years have been 10%, -15%, 35%, 10%, and -20%. Stock B’s returns have been -5%, 1%, 4%, 40%, and 30%. What is the correlation coefficient for returns between stock a and stock b? My textbook said the answer is -0.35. Could you show me specifically how they came to that number? Stock A’s returns the past 5 years have been 10%, -15%, 35%, 10%, and -20%. Stock B’s returns have been -5%, 1%, 4%, 40%, and 30%. What is the correlation coefficient for returns between stock a and stock b? My textbook said the answer is -0.35. Could you show me specifically how they came to that number? Stock A’s returns the past 5 years have been 10%, -15%, 35%, 10%, and -20%. Stock B’s returns have been -5%, 1%, 4%, 40%, and 30%. What is the correlation coefficient for returns between stock a and stock b? My textbook said the answer is -0.35. Could you show me specifically how they came to that number?

Explanation / Answer

My excel and financial calculator is giving answer as r=-0.2308.If you are getting same answer your textbook answer is incorrect.Hope data is correct

Year Stock A Stock B 1 10% -5% 2 -15% 1% 3 35% 4% 4 10% 40% 5 -20% 30% Correlation(using correl function in excel) -0.231 using Financial Calculator Press 2nd+7 X01=10 Y01=-5 X02=-15 Y02=1 X03=35 Y03=4 X04=10 Y04=40 X05=-20 Y05=30 Press 2nd+8 scroww down till you get r r =-0.2308

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