If the correlation of prices between two stocks is 0.35,then the price of one stock would be expected to:
A) rise when the other stock price falls.
B) rise by 35% when the other stock price is unchanged.
C) fall when the other stock price falls.
D) fall by 35% when the other stock price is unchanged.

Question

Quizplus · Accepted Answer

A correlation of 0.35 indicates a positive relationship, meaning that when one stock's price rises, the other is also likely to rise, and when one falls, the other is likely to fall.

If the Correlation of Prices Between Two Stocks Is 0