A person is interested in constructing a portfolio. Two stocks are being considered. Letx= percent return for an investment in stock 1, andy= percent return for an investment in stock 2. The expected return and variance for stock 1 areE(x) =8.35% andVar(x) = 25. The expected return and variance for stock 2 areE(y) =3.40% andVar(y) = 1. The covariance between the returns is_xy=3.

Compute the correlation coefficient forxandy.

Comment on the relationship between the returns for the two stocks.

There is---Select--- relationship between the variables.

a strong positivea strong negativenot a