Even If the Correlation Between the Returns on Two Securities

question 34

True/False

Even if the correlation between the returns on two securities is +1.0, if the securities are combined in the correct proportions, the resulting 2-asset portfolio will have less risk than either security held alone.

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Definitions:

Standard Traits

Characteristic features or qualities that are regarded as typical or expected within a particular context or environment.

Surface-level Diversity

Diversity based on visible attributes such as age, race, and gender, rather than deeper qualities like beliefs or values.

Deep-level Diversity

Diversity among team members based on underlying attributes, such as values, beliefs, and attitudes, as opposed to visible characteristics.

Instrumental Values

Values that are considered useful or instrumental in reaching an end goal or desired outcome.