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Basic Question 0 of 27

If the covariance of Stock A with Stock B is -100, what is the covariance of Stock B with Stock A?

A. +100
B. -100
C. 1/100

User Contributed Comments 4

User Comment
Bibhu By definition, covariance is the variance of A and B together. So if covariance of A to B is -100, so would be from B to A i.e. -100.
aniketcpp can covariance be negative? A negative covariance means returns move inversely. When one variable's value goes up, the other's tends to go down
jonan203 don't confuse covariance with correlation.
Rachelle3 think of covariance as a box if you see it like this you will get it: {box 1 by box 1}. think of microsoft excel spreadsheets or the old fashioned multiplication we had to use in learning multiplication at school
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I was very pleased with your notes and question bank. I especially like the mock exams because it helped to pull everything together.
Martin Rockenfeldt

Martin Rockenfeldt

Learning Outcome Statements

calculate and interpret the mean, variance, and covariance (or correlation) of asset returns based on historical data

calculate and interpret portfolio standard deviation

describe the effect on a portfolio's risk of investing in assets that are less than perfectly correlated

CFA® 2025 Level I Curriculum, Volume 2, Module 1.