What is the return correlation between Stock X and Y?

To calculate the return correlation between Stock X and Y, follow these steps:

1. Collect Data: Gather historical price data for both Stock X and Stock Y. This data can be daily, weekly, monthly, or any other period, but it must be consistent for both stocks. You can get this data from financial websites or your brokerage.

2. Calculate Returns: The next step is to calculate the returns for each stock. This is done by subtracting the previous period's price from the current price, then dividing by the previous price. Multiply by 100 to get a percentage.

   Return = [(Current Price - Previous Price) / Previous Price] * 100

3. Create a Data Set: Once you have the returns for both stocks, create a data set or a table where each row corresponds to a specific period, and you have two columns - one for the returns of Stock X and one for the returns of Stock Y.

4. Calculate the Correlation: Now, you can calculate the correlation between the two sets of returns. You can use a statistical software or a calculator that can compute correlations. In Excel, you can use the CORREL function.

   Correlation = CORREL(Array1, Array2)

The correlation coefficient will be a number between -1 and 1. A positive correlation indicates that the two stocks tend to move in the same direction, while a negative correlation indicates that they move in opposite directions. A correlation close to 0 indicates that there's no linear relationship between the returns of the two stocks.

Remember, correlation does not imply causation. Just because two stocks are correlated does not mean that the movement of one causes the movement of the other.