Statistics, Portfolio Management, Stock Market, Modern Portfolio Theory, Standard Deviation.
correlation coefficient (ρ12). When the two assets are perfectly correlated, ρ12 will be 1, and when they are yin-yang, ρ12 will be -1, and when uncorrelated it will be zero. Here is the effect of ρ12 on the portfolio’s standard deviation. When we our example assets, because they were random, they