In order to reduce risk, one should diversify into areas that are positively correlated with current areas of involvement.
One can "diversify away" some element of risk by combining investments that operate in opposite directions from each other.

Question

Quizplus · Accepted Answer

The statement is false. One can diversify away risk by investing in areas that are negatively correlated or have no correlation with current areas of involvement. This helps to spread the risk and reduces the overall risk of the investment portfolio.

In Order to Reduce Risk, One Should Diversify into Areas