Volatility, Trading, Derivatives Market, Quantitative Finance, Finance.
correlation the same way volatility is traded. Let’s look at how portfolio volatility (of two assets) is calculated: Where Cov(i,j) = ρ(i,j) σ(i)σ(j) As we can see, our portfolio volatility is a byproduct of the assets’ variance and the covariance, which means that we can isolate the covariance and