Hypothetical Q

[achokshi]

SAy you are given two expected returns for two different assets (Asset 1 and Asset 2). Assume they are equally weighted in a portfolio. Then you receive the actual return of the portfolio as X%. How do you calculate the correlation?

 

[tickersu]

achokshi wrote:
SAy you are given two expected returns for two different assets (Asset 1 and Asset 2). Assume they are equally weighted in a portfolio. Then you receive the actual return of the portfolio as X%. How do you calculate the correlation?

Is there any more information, and the correlation of what (the portfolio expected and actual returns, or the assets’ actual returns)?

 

[achokshi]

Asset’s actual returns. Not an actual question just a thought so no numbers. but say asset 1’s expected return is 2%….. asset 2’s expected return is 3%….. equal weighted portfolio of the two assets. Actual return ends up being 1%… what is the correlation of the two assets?

 

[S2000magician]

Given only their expected returns and the portfolio’s return, you haven’t enough information to calculate the correlation of their returns.

 

[achokshi]

S2000magician wrote:
Given only their expected returns and the portfolio’s return, you haven’t enough information to calculate the correlation of their returns.

That’s probably why I couldn’t arrive at an answer haha, thanks!