Question

When two companies' profits tend to move in opposite directions in response to changing economic factors, the companies are likely

Option 1: negatively correlated.
Option 2: not correlated.
Option 3: unrelated in industry sector.
Option 4: in different regions of the world

Answer 1

When two companies' profits tend to move in opposite directions in response to changing economic factors, the companies are likely negatively correlated.

Step-by-step explanation:

When two companies' profits tend to move in opposite directions in response to changing economic factors, the companies are likely Option 1: negatively correlated. This means that as one company's profits increase, the other company's profits decrease, and vice versa. For example, if Company A is in the travel industry and Company B is in the hospitality industry, a decrease in travel demand due to economic factors would likely result in a decrease in Company A's profits and an increase in Company B's profits.