Which of the following portfolios has the least reduction of risk?
A. A portfolio with securities all having positive correlation with each other
B. A portfolio with securities all has zero correlation with each other
C. A portfolio with securities all having negative correlation with each other
D. A portfolio with securities all has skewed correlation with each other
Answer: Option A
Solution (By Examveda Team)
A portfolio with securities all having positive correlation with each other has the least reduction of risk. A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds.This Question Belongs to Commerce >> Financial Management
It's wrong I think, negative correlation is the correct answer
if there is positive relation then all securities moves in same direction then how we can get least risk portfolio...now this time give explaination