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Assume I own 50 stocks in my portfolio which has an average correlation of 0.34. I suddenly decide to sell all of my worst performing
Assume I own 50 stocks in my portfolio which has an average correlation of 0.34. I suddenly decide to sell all of my worst performing stocks from last year. I now have 18 stocks and this new portfolio has an average correlation of 0.75. Given this, what has most likely happened to the overall risk in the portfolio?
My overall risk has decreased | ||
My overall risk remained the same | ||
My overall risk has increased |
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