The concept of diversification is central to portfolio management. However, there are limitations to the benefits of diversification, as stated in the summary. Discuss the factors that can limit the effectiveness of diversification in reducing portfolio risk. Consider the impact of highly correlated assets, the presence of systemic risks, and the potential limitations of historical data in estimating correlations. As portfolio managers, how might you navigate these challenges and enhance the risk$-$reducing benefits of diversification? Provide examples or case studies to support your arguments.