Consider the following correlations: Given this data,which of the following is most preferable if an investor can only select one pair of companies?
A) Apple and IBM
B) Disney and IBM
C) Disney and Apple
D) It does not matter which two are selected-there is no preference order.

Question

Consider the following correlations:  Given this data,which of the following is most preferable if an investor can only select one pair of companies?
A) Apple and IBM 
B) Disney and IBM 
C) Disney and Apple 
D) It does not matter which two are selected-there is no preference order.

Quizplus · Accepted Answer

The data given suggests a positive correlation between Disney and Apple. This means that as one company's stock price increases, the other company's stock price tends to increase as well. Therefore, investing in both companies may offer diversification benefits while potentially maximizing returns. Choosing Apple and IBM or Disney and IBM may not offer the same diversification benefits or potential for maximizing returns based on the data given.

Consider the Following Correlations: Given This Data,which of the Following