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You are considering investing in three different stocks. Being a conservative investor, you are able to obtain returns data for the three stocks for the

You are considering investing in three different stocks. Being a conservative investor, you are able to obtain returns data for the three stocks for the years 2014 through to 2020. The data is summarised below:

Year

Stock A Stock B Stock C

2014

10%

12%

25%

2015

13%

14%

20%

2016

15%

10%

22%

2017

14%

11%

18%

2018

16%

9%

17%
2019

14%

9%

18%

2020

12%

10%

16%

Calculate the correlation coefficients between A and B, A and C, and B and C. What can you conclude? 4 marks

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