Covariance measures the directional relationship between the returns on two assets. A positive covariance means that asset returns move together while a negative covariance means they move inversely. Covariance is calculated by analyzing at-return surprises (standard deviations from the expected return) or by multiplying the correlation between the two variables by the standard deviation of each variable.
Click to rate this post!
[Total: 0 Average: 0]