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← What Is Correlation
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Question
What does a correlation coefficient of +0.9 between two assets indicate?
1
The two assets move very closely together — when one rises or falls, the other tends to do the same
2
The two assets are from the same country and the same industry sector
3
Adding the second asset to the first reduces portfolio volatility by 90%
4
One asset's returns are 90% of the other asset's returns in every period
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