Investopedia contributors come from a range of backgrounds, and over 25 years there have been thousands of expert writers and editors who have contributed. Covariance indicates the relationship ...

rho = -0.993 This is a VERY strong relationship! 9. Discuss the difference between the covariance and the Pearson's r. Pearson's r involves a modification of covariance. Instead of using the sum of ...

There is a growing need for the ability to specify and generate correlated random variables as primitive inputs to stochastic models. Motivated by this need, several authors have explored the ...

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and ...

Harry Markowitz famously quipped that diversification is the only free lunch in investing. What he did not say is that this is only true if correlations are known and stable over time. Markowitz’s ...