Owning two securities instead of one will not improve a portfolio's risk-return tradeoff if the two securities are:
A) perfectly positively correlated with each other.
B) perfectly independent of each other.
C) perfectly negatively correlated with each other.
D) of the same category,
E)g. blue chips.

Question

Quizplus · Accepted Answer

If two securities are perfectly positively correlated, their returns move in the same direction and proportion, so combining them does not reduce risk or improve the risk-return tradeoff.

Owning Two Securities Instead of One Will Not Improve a Portfolio's