Discuss the meaning of table 7.4 with a particular focus on the reduction in standard deviations for the p = 0 and p = .40 correlation cases. How should one interpret what happens to standard deviation at n = 20, 100, and 101? Mathematically, explain the derivation and implications of equation 7.21 in the context of diversification.

Table 7.4 Risk reduction of equally weighted portfolios in correlated and uncorrelated universes Portfolid Standard Deviation Reduction Standard Deviation (%) 50.00 41.83 36.06 35.36 33.91 33.71 32.79 32.73 31.86 31.86 Universe Weights Size n w-1 (%) (%) Reduction in T 8.17 0.70 0.20 in 50.00 35.36 22.36 20.41 15.81 15.08 11.18 10.91 5.00 4.98 100 14.64 50 20 16.67 1.95 0.73 0.27 0.02 9.09 20 0.06 4.76 100 101 0.00 0.99