seminar: timely topics for today’s business world
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Seminar: Timely Topics for Today’s Business World. Mr. Bernstein Correlation J anuary 2012. Seminar: Timely Topics for Today’s Business World Mr. Bernstein. Correlation In the world of finance, a statistical measure of how two securities move in relation to each other. - PowerPoint PPT PresentationTRANSCRIPT
Seminar: Timely Topics for Today’s Business World
Mr. Bernstein
Correlation
January 2017
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Seminar: Timely Topics for Today’s Business World
Mr. Bernstein
CorrelationIn the world of finance, a statistical
measure of how two securities move in relation to each other.
Correlation is computed into what is known as the correlation coefficient, which ranges between -1 and +1.
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Seminar: Timely Topics for Today’s Business World
Mr. Bernstein
CorrelationPerfect positive correlation (a correlation co-efficient of +1) implies that
as one security moves, either up or down, the other security will move in lockstep, in the same direction.
Perfect negative correlation means that if one security moves in either direction the security that is perfectly negatively correlated will move in the opposite direction.
If the correlation is 0, the movements of the securities are said to have no correlation; they are completely random.
In real life, perfectly correlated securities are rare, rather you will find securities with some degree of correlation
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Seminar: Timely Topics for Today’s Business World
Mr. Bernstein
Correlation TablesCorrelation, or Covariance, Tables, provide data
which feeds overall risk measurement of a portfolio of assets
Mixing assets with low correlation will reduce riskAssets with high correlation will do little to reduce
overall risk
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Seminar: Timely Topics for Today’s Business World
Mr. Bernstein
CorrelationMatrix
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Seminar: Timely Topics for Today’s Business World
Mr. Bernstein
Correlations changeover time
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Seminar: Timely Topics for Today’s Business World
Mr. Bernstein
Correlation among S&P 500 stocks over time
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Seminar: Timely Topics for Today’s Business World
Mr. Bernstein
Price Regression Hedge (PRH) – KO vs PEP
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Seminar: Timely Topics for Today’s Business World
Mr. Bernstein
Price Regression Hedge (PRH) – KO vs GOOG
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Seminar: Timely Topics for Today’s Business World
Mr. Bernstein
Price Regression Hedge (PRH) – KO vs Bond ETF
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Seminar: Timely Topics for Today’s Business World
Mr. Bernstein
Graph Ratio (GR)
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Seminar: Timely Topics for Today’s Business World
Mr. Bernstein
Spread Graph Price (SGP)