Risk of portfolio if asset of low correlation are combined, Financial Management

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What happens to the riskiness of a portfolio if assets with very low correlations (even negative correlations) are combined?

How successfully diversification decreases risk relies on the degree of correlation among the two variables in question.  While assets with very low or negative correlations are combined in portfolios, the riskiness of the portfolios (as calculated by the coefficient of variation) is greatly reduced.


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