For the most part,stocks are ________ ________,so you ________ diversify away all of a portfolio's variance.Because the average covariance is ________,even a large portfolio of international stock will have a ________ variance.

Question

Quizplus · Accepted Answer

Stocks are generally positively correlated, meaning they tend to move in the same direction. Therefore, you cannot diversify away all of a portfolio's variance. The average covariance among stocks is positive, indicating that even a large portfolio of international stocks will have a positive variance, not eliminating risk entirely.

For the Most Part,stocks Are ________ ________,So You ________ Diversify

For the Most Part,stocks Are ,So You Diversify