state with reasons if this is true or false 1 A fund manager who used to use a correlation coefficient estimate of 0.40 between two asset classes when combining them into a portfolio finds out after considering recent return data that the correlation coefficient estimate needs to be updated to 0.65. No other characteristic of the two asset classes have changed with the recent data. This increase in the correlation coefficient between these two asset classes means that the diversification benefits of combining them in a portfolio have now increased