A Correlation of R = -0

question 26

True/False

A correlation of r = -0.95 means that there is essentially no consistent relationship between X and Y.

---

Definitions:

Portfolio Beta

A measure of a portfolio's volatility relative to the market as a whole; it indicates the sensitivity of the portfolio's returns to market returns.

Unsystematic Risks

Risks that affect a specific company or industry, as opposed to the market as a whole, including management decisions or product recalls.

Well-Diversified Portfolio

An investment portfolio that spreads risk and opportunity across a wide range of assets and sectors, aiming to reduce the impact of any single investment's poor performance.

Diversifiable Risk

A type of investment risk that can be reduced through diversification, relating to factors affecting specific industries, companies, or securities rather than the market as a whole.