Estimate covariance matrix using a single factor statistical factor model
covarianceSF(beta, stockM2, factorM2)(N x N) covariance matrix
vector of length N or (N x 1) matrix of factor loadings (i.e. the betas) from a single factor statistical factor model
vector of length N of the variance (2nd moment) of the model residuals (i.e. idiosyncratic variance of the stock)
scalar value of the 2nd moment of the factor realizations from a single factor statistical factor model
This function estimates an (N x N) covariance matrix from a single factor statistical factor model with k=1 factors, where N is the number of assets.