asked 136k views
3 votes
Which of the following correlations would represent two assets that tend to move in tandem with one another?

A)−0.68.
B)0.16.
C)0.81.
D)−0.11.

asked
User Monkut
by
7.5k points

1 Answer

2 votes

Final answer:

The correlation representing two assets moving in tandem is option C) 0.81, which signifies a strong positive correlation and indicates the assets move in the same direction.

Step-by-step explanation:

The correlation that represents two assets that tend to move in tandem with one another is a positive correlation. A positive correlation means that as one asset's value increases, the value of the other asset tends to increase as well, and vice versa for decreases. Thus, among the given options, the one that represents the strongest positive correlation is C) 0.81, indicating that the two assets are likely to move in the same direction.

From the concept that the correlation coefficient indicates the strength and direction of a linear relationship between two variables, a correlation of 0.81 is considerably strong, and since it is positive, it implies that the movements of the two assets are synchronized to a good extent.

answered
User Tracey
by
7.9k points
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