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Question: for #3, the example provided does this relate to the second point more or is truly related to statistics? If it is, how so?
Question: for #3, the example provided does this relate to the second point more or is truly related to statistics? If it is, how so? Industry classification is an attempt to place companies in a group based on their commonalities There are three major approaches to industry classification 1. Products and/or services supplied: This classification is usually based on its main business activity fromwhich the revenue is generated 2. Business Cvcle Sensitivities: Companies sometimes are classified as Cyclical or Non Cyclical based on its sensitivity towards business cycle. A cyclical company is one whose profits are strongly correlated with the strength of the overall economy and A non-cyclical company is one whose performance is largely independent of the business cycle 3. Statistical Similarities: Statistical approaches group companies based on the correlations of past securities' returns For Example: * Consumer discretionary: cyclical consumer- related products or services * Consumer staples: non-cyclical consumer- related products or services
Question: for #3, the example provided does this relate to the second point more or is truly related to statistics? If it is, how so?
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