For an investment to diversify a portfolio, its returns must be positively correlated with other returns.

Name: For an investment to diversify a portfolio, its returns must be positively correlated with other returns.
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Question

For an investment to diversify a portfolio, its returns must be positively correlated with other returns.​

Quizplus · Accepted Answer

For an investment to diversify a portfolio, its returns must be negatively or uncorrelated (not correlated) with other returns, as diversification aims to reduce overall portfolio risk by spreading investments across multiple uncorrelated assets.

For an Investment to Diversify a Portfolio, Its Returns Must