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The standard deviation is the square root of the variance, so the standard deviation is: Standard deviation: ? And for Slowpoke: to find the covariance. Doing so, we find: Since the correlation is the covariance divided by the product of the standard deviations, the correlation between Supertech and Slowpoke is: Correlation: ? Covariance and Correlation with Historic Data While we just discussed the calculation of covariance and correlation using unequal probabilities, both calculations are often done using historic market data. When using historic data, Excel has built-in functions that will calculate the covariance and correlation for you. Suppose we have the following returns for the market and a stock: What is the covariance and correlation of the returns between this stock and the market? The standard deviation is the square root of the variance, so the standard deviation is: Standard deviation: ? And for Slowpoke: to find the covariance. Doing so, we find: Since the correlation is the covariance divided by the product of the standard deviations, the correlation between Supertech and Slowpoke is: Correlation: ? Covariance and Correlation with Historic Data While we just discussed the calculation of covariance and correlation using unequal probabilities, both calculations are often done using historic market data. When using historic data, Excel has built-in functions that will calculate the covariance and correlation for you. Suppose we have the following returns for the market and a stock: What is the covariance and correlation of the returns between this stock and the market

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