Bartleby the Scrivener
Economy
Consider the table below, which describes the rate of economic growth (X) and the rate of return on the S&P (Y). Assume that X & Y are discrete random variables.
Economic Growth, %
X
S&P Returns, %
Y
4.8
3.8
3.5
4.6
4.2
7.2
3.6
5.1
a) Compute the covariance between the returns of the S&P and economic growth .
b) Compute the correlation coefficient and interpret your findings .