Correlation measures how two investments move in relation to each other. Correlation of +1 means they move in perfect lockstep. Correlation of 0 means they move independently. Correlation of -1 means they move in opposite directions. Diversification works because you combine assets with low or negative correlations.
Lesson Locked
This Lesson Is For Paid Subscribers
Subscribe to access the full lesson, commentary, and your day-by-day course progression.