What is Covariance?

What is Covariance?

Abdulla Javeri

30 years: Financial markets trader

This is the first of a series of videos that examine the relationship between two assets. There are three basic measures that are usually used - this video pertains to covariance. Abdulla explains this method by using an example and outlining the formula.

This is the first of a series of videos that examine the relationship between two assets. There are three basic measures that are usually used - this video pertains to covariance. Abdulla explains this method by using an example and outlining the formula.

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What is Covariance?

4 mins 40 secs

Overview

Covariance measures the directional relationship between two assets. When calculated, it can help determine how one asset moves in relation to another.

Key learning objectives:

  • Understand and learn how to calculate covariance

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Summary
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Expert
Abdulla Javeri

Abdulla Javeri

Abdulla’s career in the financial markets started in 1990 when he entered the trading floor of the London International Financial Futures Exchange, LIFFE, and qualified as a pit trader in equity and equity index options. In 1996, Abdulla became a trainer for regulatory qualifications and then for non-exam courses, primarily covering all major financial products.

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