A portfolio combining two assets whose returns are less than perfectly positive correlated can increase total risk to a level above that of either of the components.

Name: A portfolio combining two assets whose returns are less than perfectly positive correlated can increase total risk to a level above that of either of the components.
Brand: Quizplus
Rating: 4.8 (36 reviews)

Question

Quizplus · Accepted Answer

Combining two assets whose returns are less than perfectly positively correlated actually decreases total risk due to diversification benefits, not increases it.

A Portfolio Combining Two Assets Whose Returns Are Less Than