What is the covariance of returns on A and B?

The standard deviation of return on investment A is 0.10 while the standard deviation of return on investment B is 0.04. If the correlation coefficient between the returns on A and B is -0.50. Please give me detail explaination, thanks

hey

the Covariance of returns on two stocks can be found by using the following formula:

Covariance A,B = (Standard Deviation of A) x (Standard deviation of B) x (Correlation of A,B)

so all you do is multiply:

Covariance A,B = (0.10)(0.04)(-0.50) = -0.002

hope that helps.

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