Quant Question
Anyone have any idea what type of statistical relationship that may exist between the standard deviation of return and the standard deviation of market capitalisation
Anyone have any idea what type of statistical relationship that may exist between the standard deviation of return and the standard deviation of market capitalisation
+40 | Wharton Huntsman Program vs Yale vs Dartmouth | 40 | 1d | |
+32 | Umich Ross vs Rice vs Notre Dame Mendoza | 17 | 1d | |
St Andrews vs LSE vs Middlebury | 19 | 1h | ||
+26 | Target School Kids Stop Complaining | 6 | 1d | |
+25 | Oxbridge or Top 15 US School. | 7 | 1d | |
+23 | Imperial College Finance Masters' | 5 | 1d | |
+20 | LSE BSc Economics vs Cambridge BA Economics | 7 | 1d | |
+18 | UK/EU MSc's in Finance | 7 | 1d | |
+14 | Succeeding at Penn CAS? | 3 | 2h | |
+14 | Engineering vs Business degree? | 7 | 18h |
Career Resources
Perhaps you're looking for a more scientific answer, but at face value there is a clear positive correlation between the two (volatile earnings = volatile valuation).
However, the magnitude of this correlation would be strongly influenced by the Company's capital structure, among other things. The higher the financial leverage, the more volatile a market cap would react to changes in earnings (since the debt portion of EV remains relatively more fixed than equity).
Looking at the standard deviation of weekly change in FTSE100 firm stock prices and the standard deviation of the market capitalisation
So you're asking do companies with smaller market caps have more/less volatile stock prices?
I would say that's definitely a negative correlation if you think about stocks in general. Since penny stocks are for example known to jump around quite alot. But since FTSE100 companies are the highest capitalized co.s on the LSE the correlation is likely to be weak.
A simple question unless I misunderstood.
Sed repellat ea aliquid sunt eveniet in. Quam itaque excepturi beatae ducimus repellat asperiores et. Ea in nulla consequuntur corporis ut. Non tenetur voluptatibus placeat eveniet non est aut optio. Debitis omnis beatae et repellat dolor fuga et. Hic laboriosam veniam non voluptatem inventore vel.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...