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Investment Preferences and Risk Analysis by Gabriel Podolsky is a document available to read on EtoBox.
What is Investment Preferences and Risk Analysis about?
The number of covariance terms increases exponentially with the number of assets. As the number of assets increases, the portfolio variance approaches the weighted average of the individual asset variances. Diversification reduces unsystematic risk. It does not eliminate systematic (market) risk. The benefits of diversification are largest when asset returns are imperfectly correlated. Perfect positive correlation results in no risk reduction from diversification.
- Author
- Gabriel Podolsky
- Language
- EN