Your portfolio currently consists of only Apple and you are considering adding an additional security to the portfolio. You correctly calculate the correlation coefficient between Apple and the additional security. Which of the following correlation coefficients would provide diversification benefits? Select all that apply -0.50 0 -1 0.5 1
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A correlation of -1 indicates a perfect negative correlation, meaning that when one asset goes up, the other goes down. A correlation of 0 indicates no correlation, and a correlation close to 0 also provides diversification benefits. Positive correlations, Show more…
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