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Diversification in an investment portfolio is a significant concept for creating the highest return for the...

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Finance

Diversification in an investment portfolio is a significantconcept for creating the highest return for the least amount ofrisk. To create this diversification portfolio managers considerthe correlation of investments. Based on your reading, thoroughlyexplain how correlation is interpreted and how it can help with thecreation of a diversified portfolio.

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Diversification is the process of combining variety of assets to reduce the overall risk of the investment and achieve the greatest return possible It can be only used to reduce the portfolio risk but not the market risk of investment because it cannot be diversified Correlation is interpreted as the intensity to which two variables move together    See Answer
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