The following equally likely outcomes have been estimated for the returns on Portfolio G and Portfolio H: Scenario Portfolio G Portfolio H 1 5.0% 9.0% 2 3.0% -7.0% 3 9.0% 15.0% 4 9.0% -4.0% Which of the two portfolios is riskier? a. Portfolio H since it has the possibility of a negative return b. Portfolio G since it has the higher expected return c. Both portfolios are equally risky since the possible returns of each are equally likely to occur d. Portfolio H since its returns are more widely dispersed around the expected return
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
The following equally likely outcomes have been estimated for the returns on Portfolio G and Portfolio H:
Scenario Portfolio G Portfolio H
1 5.0% 9.0%
2 3.0% -7.0%
3 9.0% 15.0%
4 9.0% -4.0%
Which of the two portfolios is riskier?
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