The correlation coefficient:

1. Shows a stronger relationship between the returns of 2 securities when its absolute value is closer to 0.

2. Provides the greatest diversification benefits for a given portfolio when at least 2 securities in the portfolio have a correlation coefficient equal to -1.

3. As long as pAB = 0.1 (correlation), an equally weighted portfolio which only consist of stock A and stock B would always be risk-free

A) 1 is correct

B) 2 is correct

C) 1 and 2 are correct

D) 1 and 3 are correct

E) 2 and 3 are correct