Hi everyone, just going through Schweser Book 4 - Asset Valuation and Equity. On page 137 - LOS 45.b - it says: “Whenever multiple variables (metrics) are used to measure the sam financial characteristic, it is important that their [correltaion] coefficients be positive.” However would’t that imply multi coliniearity and thus violate the regression assumptions? Or am I missing something? thanks everyone! YY
i think they’re referring to the correlation between the financial characteristic and the variables…not the correlation between the variables itself…