Answer: 0.1865

## Calculation Explanation The correlation coefficient between Stock X and Stock Y is calculated using the formula: \[\text{Corr}(Rₓ, Rᵧ) = \frac{\text{Cov}(Rₓ, Rᵧ)}{\sigma(Rₓ) \cdot \sigma(Rᵧ)}\] **Given:** - Covariance: Cov(Rₓ, Rᵧ) = 0.093 - Variance of Rₓ = 0.69 - Variance of Rᵧ = 0.36 **Step 1: Calculate Standard Deviations** Since variance = σ²: - σ(Rₓ) = √0.69 = 0.8306 - σ(Rᵧ) = √0.36 = 0.6 **Step 2: Calculate Correlation** \[\text{Corr}(Rₓ, Rᵧ) = \frac{0.093}{0.8306 \times 0.6} = \frac{0.093}{0.49836} = 0.1865\] **Verification:** - 0.8306 × 0.6 = 0.49836 - 0.093 ÷ 0.49836 = 0.1865 Therefore, the correlation coefficient is **0.1865**, which corresponds to option B.

Author: Tanishq Prabhu