What can we infer from the fact that the correlation coefficient between Project

Question

What can we infer from the fact that the correlation coefficient between Project George and Project Puddy was 0.00?

a. That the covariance between the two projects will be equal to zero

b. That the projects have a direct relationship with each other

c. That the diversification gain between the two projects will be zero (or close to zero)

d. That the expected return of the two projects will be zero (or close to zero)

e. That the state dependent returns must have had equal probability of occurring

Explanation / Answer

b. That the projects have a direct relationship with each other

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