covariance

Hi all, Refer to the highlight in blue box in the attached file, I have 2 questions to ask. 1) May I know why when calculating Cov(X,Y), the first summation is 0.83? Based on the formula given in previous slides, covariance (X,Y) of the population is (1/n)*summation i=1 to n(Xi-μ)(Yi-μ) where...

Session 2, Reading 9 (Part 2): This video reviews portfolio variance and covariance, where covariance is the expected cross-product. We look at correlation, which is given by the covariance divided by the product of standard deviations, and therefore standardizes the covariance into a unitless...

Covariance is a measure of linear co-movement between variables. Independence implies zero covariance, but the converse is not necessarily true (because variables can be dependent in a non-linear way). Here is David's XLS: http://trtl.bz/2B9nqdO

Variables are independent if and only if (iff) their JOINT probability is equal to the product of their unconditional (aka, marginal) probabilities; i.e., if and only if Prob(X,Y) = Prob(X)*Prob(Y). Further, if variables are independent then their covariance (and correlation) is equal to zero...

Can someone explain how mean & variance have been calculated in this example?

I was looking at this specific 2-asset portfolio example and noticed that BT uses the matrix formula to get the variance of P. What I'm confused about is why do you not use the variance formula: variance = X1^2*stddev(asset1)^2 + X2^2*stddev(asset2)^2 +...