Which of the following statements is FALSE?
A)Dividing the covariance by the volatilities ensures that correlation is always between -1 and +1.
B)Volatility is the square root of variance.
C)The closer the correlation is to 0,the more the returns tend to move together as a result of common risk.
D)If two stocks move together,their returns will tend to be above or below average at the same time,and the covariance will be positive.

Question

Quizplus · Accepted Answer

The closer the correlation is to 0, the less the returns tend to move together. A correlation close to 0 indicates little to no linear relationship between the returns.

Which of the Following Statements Is FALSE