Let's assume that I have a specific sample of stocks.
75% of the time, I can pick the correct direction to trade because they correlate with a certain characteristic.
With this same sample of stocks, I can pick the correct direction to trade 75% of the time because they also correlate with another characteristic.
Now if I pick one of these stocks that correlates with both characteristics do
I enhance my probability of success and if so, by how much.
Replies will be sincerely appreciates.
Isn't it a function of the correlation of the 2 characteristics? In the degenerate case where corr(characteristic1,characteristic2)==1, the probability should still be 75%, right?