"Intraportfolio Correlation": An Application For Investments Students
Global Conference On Business & Finance Proceedings
Business and Leadership
"Intraportfolio correlation," a measure of portfolio diversification, is becoming increasingly popular among investment practitioners. However, far from providing the "free lunch" its adherents assert, the intraportfolio correlation is a simplistic and flawed measure that ignores material information about the relationships among portfolio assets. Deconstructing the intraportfolio correlation therefore can be a productive and educational exercise (and a cautionary tale) for students of portfolio theory. In this paper, we describe the measure and offer suggestions for incorporating it into an introductory investments course.
Livingston, Lynda S.. 2012. ""Intraportfolio Correlation": an Application for Investments Students." Global Conference On Business & Finance Proceedings 7(1): 389-394.