Which one of these is a measure of the interrelationship between two securities?
A)Covariance
B)Duration
C)Standard deviation
D)Alpha
E)Variance

Question

Quizplus · Accepted Answer

Covariance is a statistical measure of the interrelationship between two securities. It helps in understanding the degree to which two variables move in relation to each other. The covariance can be positive, negative, or zero and is used in portfolio theory to determine the diversification benefits of combining two assets in a portfolio. Duration is a measure of the sensitivity of the price of a bond or other fixed-income asset to changes in interest rates, while standard deviation and variance are measures of the dispersion of data around the mean. Alpha is a measure of risk-adjusted performance, indicating how much return an investment has generated in comparison to the expected return for its level of risk.

Which One of These Is a Measure of the Interrelationship