On Mar 19, 12:38 pm, "dc...@hotmail.com" <dc...@hotmail.com> wrote: > Hi; > > could someone suggest how to calculate a random variable with 0 > correlation to a series of know observations? > > I have a dataset that consists of stock price returns for one stock on > a dly basis. Total number of observations is 200. I need to create a > random variable with 200 observations that has a correlation of .2 > with this dataset

You ask for a random variable that has zero correlation with another RV? That's easy, just use any random number generator, your new variable is uncorrelated with the old.

You ask for a random variable that has 0.2 correlation with another RV? The method is here: http://www.uvm.edu/~dhowell/StatPages/More_Stuff/Gener_Correl_Numbers.html

-- Paige Miller paige\dot\miller \at\ kodak\dot\com