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IIBA Exam CBDA Topic 1 Question 9 Discussion

Actual exam question for IIBA's CBDA exam

Question #: 9
Topic #: 1

[All CBDA Questions]

A data scientist is analyzing a dataset to determine if there is a strong relationship between two variables. A measure of covariance is done. Which of the following graphs indicate Zero Covariance between variables?

A2

B1

C4

D3

Show Suggested Answer

Suggested Answer: C

Covariance measures the directional relationship between the returns on two assets. A positive covariance means that asset returns move together while a negative covariance means they move inversely. Zero covariance indicates that the returns on the two assets move independently of each other. In the context of a scatter plot, zero covariance is represented by a plot where the points do not show any upward or downward trend but are rather scattered randomly on the graph with no discernible pattern.

Graph 4 displays such a pattern where there is no apparent relationship between the variables on the x and y axes, indicating that there is zero covariance between them.

by Milly at Apr 19, 2024, 12:28 PM

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Hortencia

7 months ago

I can see your point, maybe option C) 4 is indeed the correct answer. We should focus on the lack of pattern in the data points for zero covariance.

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Gretchen

7 months ago

I agree with option C) 4 seems to be the best choice as it doesn't show any linear relationship between the variables.

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Precious

7 months ago

I see what you mean, but I think option C) 4 also shows zero covariance because there is no clear trend in the data points.

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Hortencia

7 months ago

But in zero covariance, the points are not linearly related, so the graph should show no pattern like option B.

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Mabel

7 months ago

I disagree, I believe the correct answer is A) 2.

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Hortencia

7 months ago

I think the answer is B) 1.

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Alisha

8 months ago

So, graph 1 shows no clear relationship between the variables.

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Luther

8 months ago

I agree, because when there is zero covariance, the points are scattered randomly.

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Lawana

8 months ago

I think the correct answer is B) 1.

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