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James currently owns Stock Y and wants to diversify his portfolio to reduce his exposure to unsystematic risk. Given the correlation of Stock Y with

James currently owns Stock Y and wants to diversify his portfolio to reduce his exposure to unsystematic risk. Given the correlation of Stock Y with the following stocks, which stock should he own along with Stock Y?

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d) Stock D: Correlation = 0.05

a) Stock A: Correlation = 1.0

b) Stock B: Correlation = 0.25

e) Stock E: Correlation = 0.00

c) Stock C: Correlation = 0.65

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