What Role Does the Correlation of Two Assets Play in Computation

question 72

Essay

What role does the correlation of two assets play in computation of the expected return of the two asset portfolio?

---

Definitions:

Optimists

Individuals who tend to maintain a positive outlook on life and anticipate positive or favorable outcomes, often exhibiting resilience in the face of adversity.

Pessimists

Individuals who tend to see the worst aspect of things or believe that the worst will happen; a tendency to expect negative outcomes.

Attitude-improving Feedback

Constructive criticism or positive reinforcement aimed at encouraging a change in behavior or attitude.

Mentally Challenging

Tasks or activities that require significant cognitive effort and thought, stimulating intellectual growth.