A statistic that measures how the returns of two risky assets move together is:
A) variance.
B) standard deviation.
C) covariance.
D) correlation.
E) covariance and correlation.

Question

Quizplus · Accepted Answer

Covariance and correlation are both statistics that measure how the returns of two risky assets move together. Covariance measures the directional relationship between the returns on two assets, while correlation standardizes this measure to a range between -1 and 1, making it easier to interpret.

A Statistic That Measures How the Returns of Two Risky