Question: Which one is not correct? Low correlation reduces portfolio risk while not affecting the expected return -1 correlation coefficient would indicate perfect positive correlation. This

Which one is not correct?

Low correlation reduces portfolio risk while not affecting the expected return

-1 correlation coefficient would indicate perfect positive correlation. This means that returns for the two assets move together in a positively and completely linear manner.

Standard deviation of a portfolio would decrease because the added stocks would not be perfectly correlated, but expected rate of return of the portfolio would remain relatively constant.

The correlation, measured by covariance, affects the portfolio standard deviation

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