What is the definition of covariance in stock analysis? Option: The variance of a stock's return with respect to another stock's return, The total risk of a portfolio of stocks, The risk-free rate of return, The average return of a group of stocks

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What is the definition of covariance in stock analysis?

The variance of a stock's return with respect to another stock's return

The total risk of a portfolio of stocks

The risk-free rate of return

The average return of a group of stocks

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What does covariance measure in the context of the stock market?

The average return of two stocks

How the stock prices of two or more stocks move together

The difference in risk between two stocks

The total return of two stocks

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What does the value representing the covariance of a stock with itself signify?

The variance of the stock

The average return of the stock

The correlation of the stock with the market

The beta of the stock

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What does a positive covariance between two stocks indicate?

The stocks are likely to move in opposite directions

The stocks are not related in any way

One stock is guaranteed to have higher returns than the other

The stocks are likely to move in the same direction

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How is covariance typically calculated and presented when a portfolio contains more than two stocks?

Using a variance-covariance matrix

Using a simple average of all stock covariances

Using a complex algorithm that considers all stock relationships

Covariance is not calculated for portfolios with more than two stocks

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What does variance represent in the context of stock returns?

The total return of a stock over a specific period

The lowest possible return a stock can achieve

The deviation of a stock's return from its average return

The highest possible return a stock can achieve