PORTFOLIO DIVERSIFICATION LOWERS RISK                                                                   Basics
Inputs     ...
s Risk




40       50     60


                   8        9        10        11        12        13        14        15 ...
18        19        20        21        22        23        24        25        26        27
19.75%    19.71%    19.67%   ...
28        29        30        31        32        33        34        35        36        37
19.48%    19.46%    19.44%   ...
38        39        40        41        42        43        44        45        46        47
19.34%    19.34%    19.33%   ...
48        49        50        51        52        53        54        55        56        57
19.27%    19.26%    19.26%   ...
58        59        60
19.22%    19.21%    19.21%
18.97%    18.97%    18.97%
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Portfolio Diversification Lowers Risk Basics

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Portfolio Diversification Lowers Risk Basics

  1. 1. PORTFOLIO DIVERSIFICATION LOWERS RISK Basics Inputs Portfolio Diversification Lowers Risk Standard Deviation 30.00% 30.00% Correlation Coefficient 40.00% Portfolio Standard Deviation 25.00% 20.00% 15.00% 10.00% 0 10 20 30 40 50 60 Number of Assets Outputs Number of Assets 1 2 3 4 5 6 7 Portfolio Std Dev 30.00% 25.10% 23.24% 22.25% 21.63% 21.21% 20.91% Minimum Std Dev 18.97% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97%
  2. 2. s Risk 40 50 60 8 9 10 11 12 13 14 15 16 17 20.68% 20.49% 20.35% 20.23% 20.12% 20.04% 19.96% 19.90% 19.84% 19.79% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97%
  3. 3. 18 19 20 21 22 23 24 25 26 27 19.75% 19.71% 19.67% 19.64% 19.61% 19.58% 19.56% 19.53% 19.51% 19.49% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97%
  4. 4. 28 29 30 31 32 33 34 35 36 37 19.48% 19.46% 19.44% 19.43% 19.41% 19.40% 19.39% 19.38% 19.36% 19.35% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97%
  5. 5. 38 39 40 41 42 43 44 45 46 47 19.34% 19.34% 19.33% 19.32% 19.31% 19.30% 19.29% 19.29% 19.28% 19.27% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97%
  6. 6. 48 49 50 51 52 53 54 55 56 57 19.27% 19.26% 19.26% 19.25% 19.25% 19.24% 19.24% 19.23% 19.23% 19.22% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97% 18.97%
  7. 7. 58 59 60 19.22% 19.21% 19.21% 18.97% 18.97% 18.97%

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