Financial Risk Manager Part 1

Get started today

Ultimate access to all questions.

Explanation:

Standard deviation of X
$\sqrt{0.1225} = 0.35$

Standard deviation of Z
$\sqrt{0.3721} = 0.61$

Correlation coefficient

\rho_{XZ} = \frac{0.19}{0.35 \times 0.61} = 0.8899

Note: The correlation coefficient does not take asset weights into account.

Explanation:

Standard deviation of X
$\sqrt{0.1225} = 0.35$

Standard deviation of Z
$\sqrt{0.3721} = 0.61$

Correlation coefficient

\rho_{XZ} = \frac{0.19}{0.35 \times 0.61} = 0.8899

Note: The correlation coefficient does not take asset weights into account.

Comments (1)

Yash ParwaniApr 16, 2026 12:36 PM

The answer is incorrect. The correlation should be 0.89

LeetQuiz .Apr 18, 2026 7:08 AM

Hi Yash, Thanks for your feedback. You're right, the answer is 0.89. I've updated the answer and the explanation accordingly. Your comment really helps us keep us improving the quality of questions.

Comments (1)

Yash ParwaniApr 16, 2026 12:36 PM

The answer is incorrect. The correlation should be 0.89

LeetQuiz .Apr 18, 2026 7:08 AM

Hi Yash, Thanks for your feedback. You're right, the answer is 0.89. I've updated the answer and the explanation accordingly. Your comment really helps us keep us improving the quality of questions.

Hakim Ahmed has recently joined Lampard Investment Inc. He has been given data related to the assets of a client's portfolio provided in the following table:

Statistic Value
Variance (Asset X) 0.1225
Variance (Asset Z) 0.3721
Covariance (X, Z) 0.19

If the weight of Asset X is 35% and the weight of Asset Z is 65%, then what is the correlation?

Statistic	Value
Variance (Asset X)	0.1225
Variance (Asset Z)	0.3721
Covariance (X, Z)	0.19

Exam-Like

Community

TTanishq

Last updated: April 18, 2026 at 07:05

0.8899

40.0%

0.0469

20.0%

0.4412

10.0%

0.4168

10.0%