Question
Choose one stock index ETF (Or one sector ETF) and one bond index ETF. Go to yahoo/Finance and download 5 years of monthly data into
Choose one stock index ETF (Or one sector ETF) and one bond index ETF. Go to yahoo/Finance and download 5 years of monthly data into your Excel for each stock index ETF (Or Sector ETF) and bond index ETF. Calculate the monthly rate of return (P1-P0/P0) for stock index ETF (Or Sector ETF) and bond index ETF in your Excel. Compare the average return of your stock index ETF with the average return of your bond index ETF. Finally estimate the correlation of returns between bond index ETF with stock index or sector index ETF over the past 5 years. (In Excel you can easily find the correlation of returns by using the CORREL function). Why do you think the correlation between a stock index 0r sector ETF and bond index ETF is lower than the correlation between two stock index ETF?
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