2011 | OriginalPaper | Chapter
Diversification and Correlation
Author : Javier Estrada
Published in: The Essential Financial Toolkit
Publisher: Palgrave Macmillan UK
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This chapter discusses the issue of diversification, something that academics preach and most investors practice. It is often said that putting all the eggs in the same basket is not a good strategy. Diversification, at the end of the day, consists of following that simple advice when building investment portfolios, a process in which the correlation between assets plays a critical role.