# Re Calculate the variance of the market returns and the co-variance

## Question: Re Calculate the variance of the market returns and the co-variance

Re Calculate the variance of the market returns and the co-variance between the returns on the market and those of Anchovy Queen. Notes: 1) Beta is the ratio of the variance to the co-variance. 2) USE the yellow box instead of the Market return in the table.

(1) | (2) | (3) | (4) | (5) | (6) | (7) |

Product of | ||||||

Deviation | Deviation | Squared | Deviations | |||

From | From average | Deviation | From average | |||

Market | Anchovy Q | average | Anchovy Q | From average | Returns | |

Month | Return | Return | Market return | Return | Market return | (cols 4 x 5) |

1 | -8% | -11% | -10 | -13 | 100 | 130 |

2 | 4 | 8 | 2 | 6 | 4 | 12 |

3 | 12 | 19 | 10 | 17 | 100 | 170 |

4 | -6 | -13 | -8 | -15 | 64 | 120 |

5 | 2 | 3 | 0 | 1 | 0 | 0 |

6 | 8 | 6 | 6 | 4 | 36 | 24 |

Average | 2 | 2 | Total | 304 | 456 | |

Variance – σ_{m}^{2 }– 304/6 – 50.67 |
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Covariance – σ_{im } – 456/6 – 76 |
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Beta (β) – σ_{im/} σ_{m}^{2 }– 76/50.67 – 1.5 |
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Market
return |
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8.5 | ||||||

5 | ||||||

-6 | ||||||

3 | ||||||

8 | ||||||

2 |