Afternoon Mock Exam: #56 3-Asset Portfolio

How does one get the correlation § number between these 2 assets? What is the formula I’m missing? In the answer they show they don’t break out the logic and they instead “skip” a step.


I don’t have the mock with me here but as far as I remember, the correlations of assets are mentioned in someone’s statement at the end of the item set. That set is not structured along with questions asked as usual so you need to read all the set to get info that you want.

Thank you sooooooo mcuh! I see that now and feel pretty dumb. Should probably get some fresh air :slight_smile:

Also why do they not use the variance formulae for an equally weighted portfolio?

Variance = 1/n mean variance + n-1/n mean covariance??

All assets in the Pharma portfolio are equally weighted