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Homework answers / question archive / how we can explain the implication of co-movement for investore through get the correlation, beta, alpha and R sequare for the returns of two market indexes? I mean how the correlation, beta,alpha and R square help us to explain the implications of co-movement for investors!

how we can explain the implication of co-movement for investore through get the correlation, beta, alpha and R sequare for the returns of two market indexes? I mean how the correlation, beta,alpha and R square help us to explain the implications of co-movement for investors!

Finance

how we can explain the implication of co-movement for investore through get the correlation, beta, alpha and R sequare for the returns of two market indexes? I mean how the correlation, beta,alpha and R square help us to explain the implications of co-movement for investors!

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Core movements of two stock indexes for two stocks will be helpful in understanding the level of correlation between them and it will help in diversification of the portfolio because investors will be trying to always includes two stocks for to market index who are not having a higher degree of positive relation of the rate of return so if they have lower degree of rate of return of correlation between them then it will mean that they are offering with higher degree of diversification.

Beta will help in understanding the overall R squared Alpha will help in understanding the overall access rate of return which has been generated but the correlation and ask what will be the measures which will be helpful in understanding the overall level of diversification because level of diversification will be helpful in elimination of the unsystematic risk of the portfolio so if there is a very high degree of diversification through and related stocks which are having a very low degree of correlation then it will be helpful in maximization of rate of return by elimination of the unsystematic risk and it will also lead to generation of the Alpha through management of the beta.

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