Covariance: Definition, Formula, Types, and Examples

SOLVED: If the covariance between the excess return of stock A and themarket excess return is 0.03, the standard deviation of the marketexcess return is 0.15, and the standard deviation of the excessreturn of stock A is 0.25, what is the idiosyncratic volatility?What fraction of the total risk (variance) comes from thesystematic risk (variance)?Use the following formula to answer the question:1. Decomposition of total risk of a stock into systematic and idiosyncratic components: o?=po Var[e] Whe

Portfolio Variance, Weight & Return | Formulas, Meaning & Uses