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Efficient diversification was discussed in Chapter 6. Diversification in an investment portfolio is a significant concept for...

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Finance

Efficient diversification was discussed in Chapter 6.Diversification in an investment portfolio is a significant conceptfor creating the highest return for the least amount of risk. Tocreate this diversification portfolio managers consider thecorrelation of investments. Thoroughly explain how correlation isinterpreted and how it can help with the creation of a diversifiedportfolio.

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Correlation can be defined as a measure of Change in one measurement with respect to another measurement of a similar kind Correlation in finance or stock prices can be interpretted as the relative movement of a stock price with respect to another stockindex pricevalue For example Let us consider two stocks    See Answer
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