Explain/Identify

1. The characteristics of the Correlation Matrix.

2. What the correlation coefficient measures

3. How the correlation coefficient values are used in portfolio theory, i.e., the role of the correlation coefficient in portfolio theory.

\begin{tabular}{|c|c|c|c|c|c|c|c|c|} \hline & Stock A & Stock B & Stock C & Stock D & Stock E & Stock F & Stock G & Stock H \\ \hline Stock A & 1 & & & & & & & \\ \hline Stock B & 0.11189398 & 1 & & & & & & \\ \hline Stock C & 0.42674769 & 0.29351667 & 1 & & & & & \\ \hline Stock D & 0.07839271 & 0.47338165 & 0.82508445 & 1 & & & & \\ \hline Stock E & 0.65712147 & 0.4626484 & 0.53402449 & 0.31911888 & 1 & & & \\ \hline Stock F & 0.58657447 & 0.06874052 & 0.46901482 & 0.30531234 & 0.26810618 & 1 & & \\ \hline Stock G & 0.61665134 & 0.62317041 & 0.63547722 & 0.59978707 & 0.62260875 & 0.59625441 & 1 & \\ \hline Stock H & -0.48505253 & 0.10407862 & -0.35594119 & -0.00165521 & -0.43556253 & -0.22259091 & -0.20486216 & \\ \hline \end{tabular}