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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 ...

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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) ...

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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!! ...

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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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