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Should you add security b or security c to your portfolio

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Reference no: EM133118872

Question - You own security A and plan to reduce the risk of your investment thru diversification. Below you can see the volatility and correlations for securities A, B and C. Should you add security B or security C to your portfolio to reduce risk? Explain the rationale to support your assertion.

A

B

C

Volatility (SD)

56%

38%

62%

Correlation with


A

1.00

0.72

0.34

B

0.72

1.00

0.28

C

0.34

0.28

1.00

Reference no: EM133118872

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