Which of the following statements about correlation is correct a If the returns

Question

Which of the following statements about correlation is correct?

a. If the returns from two stocks are perfectly positively correlated and the two stocks have equal variance, an equally weighted portfolio of the two stocks will have a variance that is less than that of the individual stocks.

b. If a stock has a negative correlation with market, its systematic risk is more than the market risk.

c. Stocks that have correlation coefficients equal to zero will have minimum diversification benefits.

d. The weaker the positive correlation two stocks exhibit, the more risk can be reduced when they are combined in a portfolio.

e. Risk is reduced when positively-related stocks are combined to form portfolios, especially when the correlation coefficients are equal to +1.

Answer

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