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Amanda [17]
3 years ago
8

When adding a randomly chosen new stock to an existing portfolio, the higher (or more positive) the degree of correlation betwee

n the new stock and stocks already in the portfolio, the less the additional stock will reduce the portfolio's risk.1.True2.False
Business
1 answer:
kakasveta [241]3 years ago
6 0

Answer:

True

Explanation:

When adding a randomly chosen new stock to an existing portfolio, the higher (or more positive) the degree of correlation between the new stock and stocks already in the portfolio, the less the additional stock will reduce the portfolio's risk.

This simply means that ceteris paribus, stocks in the same category or having similar characteristics, will most likely result in the same level of risks.

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