Coefficient important when examining the risk of portfolio

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Why is the correlation coefficient important when examining the risk of a portfolio when a new asset is being added to that portfolio? What kind of risk can be diversified away and what kind of risk cannot? What evidence do we have that investors are generally risk averse?

Reference no: EM131579443

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Coefficient important when examining the risk of portfolio : Why is the correlation coefficient important when examining the risk of a portfolio when a new asset is being added to that portfolio?

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