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The answer is no. First, the question is ambiguous about what year Y is. Is year Y actually 2015? Knowing those returns in one year says nothing about correlation. Second, if it means that if Stock A goes up 5% then Stock B will go up by 2%, then that also says nothing. What if Stock A goes down. Does stock B go up or down? Additionally, look at the ...


Does this mean that correlation is 40%? No. Very simple example (in R). Let A and B be stocks with returns stockA and stockB. Consider following example: stockA = c(0.05, 0.04, 0.05, 0.06) stockB = c(0.01, 0.02, 0.03, 0.02) mean(stockA) mean(stockB) cor(stockA, stockB) stockA = c(0.04, 0.05, 0.05, 0.06) stockB = c(0.01, 0.02, 0.02, 0.03) mean(stockA) ...


Portfolio return is simply weighted return of parts (and NOT the formula mentioned in your post) - e.g. if you invested \$100 total equally among the four funds (\$25 each), and each of those funds earned 1% on average, then on aggregate you made 1% return on \$100 and not 4%. The trick (and the answer to your Q) lies in how you calculate these weights!! ...


You would calculate return for each single position and for each segment of time. Following that you would geometrically link all these separate returns.

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