As we add more uncorrelated shares to a portfolio where the shares are held in equal weights, the benefit of diversification is most dramatic:

Question

Quizplus · Accepted Answer

The benefit of diversification is most dramatic at the outset because adding the first few uncorrelated assets significantly reduces the portfolio's overall risk. As more assets are added, the marginal benefit of adding each new asset decreases.

As We Add More Uncorrelated Shares to a Portfolio Where