thisisbrianly

svgleeson Wrote:
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> Can somebody please confirm if I have the equation
> right or wrong. I seem to think I may have it
> slightly wrong. Thanks
>
>
> (covariance X st dev of asset) /st dev of market


Covariance/variance of market

From this, you can derive: Correlation x sd of stock/sd of market

Remember, beta has no units.
Covariance has same units as variance. Correlation has no units.
So if you have covariance in numerator, you need variance in denominator.



Edited 1 time(s). Last edit at Sunday, April 24, 2011 at 08:59AM by anish.