# Covariance Matrix for asset returns [closed]

Hey guys I'm pretty new here, not sure how to code my question so I'll include a picture reference instead. I'm a bit confused on how the standard deviation of F (commodity price) would affect the already existing matrix. Is each vector's standard deviation a combination of both risk and F? How would the covariance matrix of the returns look like?

• Why are people downvoting this question? This person has literally just said they’re new here, downvoting and not saying why doesn’t help them. – Hamish Gibson Mar 19 at 23:22

• the covariance of $F_3$ and $F_2$ is $\frac{1}{2} \times \sigma^2_f$. Other than that, the other covariances are only due to the covariance matrix of the $\epsilon$ 's. – mark leeds Mar 20 at 1:22