Ask Question
4 September, 03:58

Identify at least one type of firm that might exhibit low correlations of returns with the overall stock market? explain why the correlations of these firms are expected to be low.

+1
Answers (1)
  1. 4 September, 05:54
    0
    One firm that is historically low and deals with negatively correlated stock markets is Gold Extraction Companies. They are have very low correction with overall stock markets. The basic reason for this low correlation is that, as the stock market become bearish, investor sentiment becomes weak, due to which most of the investors withdraw their money from stock market. Now once investor has withdrawn the money from stock market, they search on safe investments which will provide them good reruns, Gold is one of the investment which is relatively safe and provide high returns. Thus withdrawn money from the share market is invested in gold by investors. Thus Gold prices and companies related to extraction of gold have very less correlation to the gold.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Identify at least one type of firm that might exhibit low correlations of returns with the overall stock market? explain why the ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers