An Investor Is Considering Purchasing an Auto Stock (A) and a Gold

Essay

An investor is considering purchasing an auto stock (A) and a gold stock (B).If the auto stock is purchased, it is expected that it will provide an -8%, 5% and 18% potential returns during recessionary, normal or boom economies.If a gold stock is purchased, it is expected that it will provide 20%, 3% or -20% returns during the three economic states.All economic states have equal chance of occurring.Based on the above information, determine the correlation between the two stocks.