Maybe I'm not providing a full information. But if you're asking about importance of covariance in trading, then before investing you should assess if your stocks are codependent.
All investors try to diversify a portfolio and minimize risks. and covariance can show if two stocks are exposed to the same risk.
Now it's easily calculated, there're different services. Actually, for better understanding just read Investopedia really.
Chat with our AI personalities
Covariance is important because it measures the relationship between two variables. It indicates the direction and strength of the relationship between the variables. Covariance can help in understanding and predicting the behavior of variables and is widely used in statistics, finance, and economics.
variance - covariance - how to calculate and its uses
The covariance between two variables is simply the average product of the values of two variables that have been expressed as deviations from their respective means. ------------------------------------------------------------------------------------------------- A worked example may be referenced at: http://math.info/Statistics/Covariance
One can find information on the covariance matrix on the Wikipedia website where there is much information about the mathematics involved. One can also find information on Mathworks.
look in a maths dictionary
100 x (standard deviation/mean)