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Econometrics

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Moderate

Correlation Example

EMETRC-E4FLL6

Suppose that for random variables $Y$ and $X$, you estimate a covariance, $\sigma_{y,x} = 0.99$ and variances, $\sigma^2_y = 1.00$ and $\sigma^2_x = 4.84$.

What is the correlation statistic?

A

$\rho = 0.45$

B

$\rho = 0.21$

C

$\rho = 0.99$

D

$\rho = 0.54$

E

$\rho = 0.38$