Covariance is a statistical measure of the extent that 2 variables move in tandem relative to their respective mean (or average) values. In the investment world, it is important to be able to measure how different financial variables interact together.
The use of correlation analysis extends to numerous important fields. For example, in finance, correlation analysis can be used to measure the degree of linear relationships between interest rates and stock returns, money supply and inflation, stock and bond returns, and exchange rates.
Monetary Policy refers to the process by which the Monetary Authority of a given country implements a variety of measures to control the supply of money.
Hyperinflation refers to out of control or extremely rapid inflation, where prices increase so quickly that the concept of real inflation becomes meaningless.
Inflation refers to the general rising of prices for goods and services in the economy, due to an increase in the amount of money and/or credit available.