In an attempt to create diversification, which of the following securities would be the best candidate for inclusion in an investor's current portfolio?

In an attempt to create diversification, which of the following securities would be the best candidate for inclusion in an investor's current portfolio?



A) Security DEF with an expected return of 20% whose return's correlation with the portfolio is +2.0.

B) Security ABC with an expected return of 10% whose return's correlation with the portfolio is -1.0.

C) Security XYZ with an expected return of 10% whose return's correlation with the portfolio is +1.0.

D) Security LMN with an expected return of 10% whose return's correlation with the portfolio is 0.



Answer: B


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