This was part of a post by Pgiger and I feel it’s really important to remind you of it as we are getting close to the exam: The STAT function can calculate for you different types of data - don’t waste your time using formulae to find it: mean, standard deviation (sample and population), and correlation coefficient Below is what SFoyil have posted: “Example: You have calculated the following returns for an individual stock and the stock market over the past four months. Ri (Y) Rm (X) Month 1 12% 15% Month 2 8% 4% Month 3 9% 12% Month 4 10% 14% Calculate the stock’s mean return, the market’s mean return, and the correlation between the stock’s returns and market returns. Step 1: Enter the data: [2nd][DATA] – make sure to [2nd][CLR WORK] first!! (Make sure its in LIN mode for 2 variables) X (01): {15}[ENTER][down] Y (01) {12}[ENTER][down] X (02) {4}[ENTER][down] Y (02) {8}[ENTER][down] X (03) {12}[ENTER][down] Y (03) {9}[ENTER][down] X (04) {14}[ENTER][down] Y (04) {10}[ENTER][down] Step 2: Calculate the statistics: [2nd][STAT][down] Mean of X [down] = X = 11.25 Sample standard deviation X [down] = SX = 4.992 Population standard deviation X [down] = stdx = 4.323 Mean of Y [down] = Y = 9.75 Sample standard deviation Y [down] =SY = 1.708 Population standard deviation Y [down] =stdY = 1.479 Intercept term [down] = a = 6.55 Slope coefficient [down] = b = 0.284 Correlation X, Y [down] = r = 0.831” In addition, if you want to find covariance, do the following: " For covariance, you will have to store [click on STO and press #] Sample Standard Deviation of X, Sample Standard Deviation of Y, and Correlation between X and Y Then RCL the # and multiply them. So When you see on screen Sx, Click on STO 1 When you see on screen Sy, Click on STO 2 When you see on screen r, Click on STO 3 After that click on 2ND and CPT to go to main screen and then click: RCL 1 * RCL 2 * RCL 3 and your covariance is there" Hope it helps
Hey Omar, indeed very helpful. Just to clarify/make sure I understand well: When you calculate the covariance at the end, you calculcate the SAMPLE covariance and not the population covariance. If you would have wanted to calculate population covariance, you need to use sx, sy and the correlation and thus it is very important to carefully read what is asked. Correct?
SE86 Wrote: ------------------------------------------------------- > Hey Omar, > > indeed very helpful. > > Just to clarify/make sure I understand well: > > When you calculate the covariance at the end, you > calculcate the SAMPLE covariance and not the > population covariance. > If you would have wanted to calculate population > covariance, you need to use sx, sy and the > correlation and thus it is very important to > carefully read what is asked. > > Correct? Hi SE86, Absolutely right - here I assumed it’s sample covariance … If you want to find population covariance, instead of storing Sx Sy you will need to store SEGMAx and SEGMAy …
Tks for this unfortunately usually you have 2 stocks and a probability associated with each outcome. so it’s hard in this case to use STAT function of Texas BA II Plus