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  book-img-for-question

ISE Investments

ISBN: 9781266085963

13th International Edition

Authors: Zvi Bodie, Alex Kane, Alan Marcus

Question Posted: