Why Does Diversification Fail to Reduce Risk When the Returns

question 48

Essay

Why does diversification fail to reduce risk when the returns of the two investments purchased are perfectly positively correlated?

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Definitions:

Subjectivity

The characteristic of relying on or being affected by one's own emotions, preferences, or views instead of objective realities.

Study Schedule

A study schedule is a planned allocation of study times and subjects, designed to enhance learning efficiency and academic performance.

Study Area

A specific space designated for reading, learning, and academic work.

Routine Tasks

Repetitive and predictable activities that are part of one's regular schedule or daily work.