Statistics for investing. Joes retirement plan invests in stocks through anindex
Chapter 0, Problem 7.31(choose chapter or problem)
Statistics for investing. Joes retirement plan invests in stocks through anindex fundthat follows the behavior of the stock market as a whole, as measuredby the S&P 500 stock index. Joe wants to buy a mutual fund that does not trackthe index closely. He reads that monthly returns from Fidelity Technology Fundhave correlation r = 0.77 with the S&P 500 index and that Fidelity Real EstateFund has correlation r = 0.37 with the index.(a) Which of these funds has the closer relationship to returns from the stockmarket as a whole? How do you know? (b) Does the information given tell Joe anything about which fund has hadhigher returns?
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