Even if the covariances are positive, the portfolio standard deviation is less than the weighted average of
Question:
Even if the covariances are positive, the portfolio standard deviation is less than the weighted average of the component standard deviations, as long as the assets are not perfectly positively correlated. Thus, portfolio diversification is beneficial as long as assets are less than perfectly correlated. P-968
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
ISE Investments
ISBN: 9781266085963
13th International Edition
Authors: Zvi Bodie, Alex Kane, Alan Marcus
Question Posted: