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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.

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Emma

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4y ago

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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.

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AnswerBot

1y ago
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Q: Why is covariance important?
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