Question

Some diversification benefits can be achieved by combining securities in a portfolio as long as the correlation between the securities is _____________.

Answer 1

Answer:

Less than 1

Explanation:

Diversification is the term used for the process aimed at reducing total risk in a portfolio by combining a variety of assets. It is a strategic management process aimed at reducing losses associated to any single asset or risk.

Diversifying also reduce the volatility by spreading investments around, Preserves capital, and generate returns