A local university offers its employees the following Fidelity investment products for their retirement plans: Fidelity
Question:
A local university offers its employees the following Fidelity investment products for their retirement plans:
• Fidelity Total Bond Fund
• Fidelity Short-Term Bond Fund
• Fidelity Magellan Fund
• Fidelity International Small Cap Fund
• Fidelity Freedom Income Fund
After working at the university for a year, Minori Vardan is now eligible to participate in the retirement plan. She has already decided to invest a portion of her retirement funds in the Magellan fund. She would like to choose one other fund that has the smallest correlation, preferably zero, with the Magellan fund. She collects 5 years of monthly return data for each mutual fund, a portion of which is shown in the accompanying table.
In a report, use the sample information to: 1. Calculate and interpret the sample correlation coefficient of each fund with Magellan. 2. Discuss the statistical significance of the correlation coefficients. 3. Make an investment recommendation for Minori.
Transcribed Image Text:
Total Short-Term Int'l Small Freedom Bond Magellan Bond 0.0013 0.0027- Cap 0.0904 Income January 2006 0.04770.0 February 2006-0.0149 0.0107 0.0152 0.0000 December 2010 0.05860.0183 .0035 0.0478 0.0036
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1 The sample correlations coefficients of each fund with Magellan are M Total M ShortTerm M Intl M F...View the full answer
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