I am a Master 'Finance' student that is heavily interested in investing. During my study, and the upcoming year, I learn(ed) much in detail how the stock market (in theory) works. I therefore created my own spreadsheet that automatically calculates everything I desire regarding my investments.
I have also added calculations with Covariances/Correlations which we worked with extensively during courses like Intermediate Asset Pricing. I am however curious about the importance of them in 'real world investing'. Obviously they have some importance, investing in stocks that all have perfectly positive correlations with each other is not a wise thing to do (not that such a thing exists, just in theory).
My question would be if it is worthwile to focus on these statistics to create a portfolio that fits my risk-apetite or if it would be a too short-sighted view of the stocks. In combination with variances, I would like to understand for myself whether certain stock drops is within the calculated variance, and thus no need to 'panic'.
Thank you in advance.
Submitted July 06, 2018 at 06:08AM by Traditional_Yogurt https://ift.tt/2KNMFua
