Given two stocks and returns for five or six periods, construct combinations of returns in Excel for these two stocks that will produce the following four different correlation coeffi­cients: -1,0, +.80, -.80. Use the CORREL function to show that your returns achieve the indicated correlation coefficient. The following example shows returns for two stocks, A and B, that produce a correlation coefficient of 1.0. You can use either five periods or six periods. Note that numerous combinations are possible in each case, so there is no one correct answer.
AB
3……………..3
9……………..9
6……………..6
10……………10
2……………..2
19……………19
CORREL = +LO