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5 of 15 The correlation coefficient: 1. Shows a stronger relationship between the returns of two securities when its absolute value is closer to 0. 2. Provides the greatest diversification benefits for a given portfolio when at least two securities in the portfolio have a correlation coefficient equal to -1. 3. As long as PAB = -1 (correlation), an equally weighted portfolio which only cons.com stock A and stock B would always be risk-free. a. Only 1 is correct Ob. Only 2 is correct oc Both 1 and 2 are correct. Od Both 1 and 3 are correct. O Both 2 and 3 are correct. Finish artamot Previous page 12 13 14 15 Next page