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Math Help - Stats - Mutual Funds

  1. #1
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    Stats - Mutual Funds

    A mutual fund report reads: "Fund A is perfectly correlated with Fund B, but Fund B is more risky, since, whenever Fund A moves 5%, Find B moves 15%.

    How can this happen?
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  2. #2
    Senior Member
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    You can think of perfectly correlated like linearly related. So the movements in B are just 3 times the movements in A. Perfectly correlated doesn't mean identical.
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