Portfolio Risk and Return: Part I
Free CFA Level I lesson in Portfolio Management. 17 min read, ~2,554 words.
Portfolio variance depends on correlation, not just individual volatilities. The cross-term is where diversification lives. Any correlation below +1 reduces portfolio risk below the weighted average of the component standard deviations. Lower correlation, larger benefit. Utility ranks portfolios. Higher A means more risk averse, steeper indifference curves, more weight to...
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Key Takeaways
- Exam Shortcuts
Learning objectives
- portfolio risk and return part I
- portfolio risk and return part II
- portfolio management overview
- portfolio planning and construction
- behavioral biases of individuals
- introduction to risk management
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