Intraportfolio Correlation: An Application For Investments Students
Business Education & Accreditation
Business and Leadership
Intraportfolio correlation (IPC), a measure of portfolio diversification, is becoming increasingly popular among investment practitioners. However, despite the assertions of these adherents, IPC is far from a free lunch. Instead, it is a simplistic and flawed measure that ignores material information about the relationships among portfolio assets. Deconstructing the IPC therefore can be a productive and educational exercise (and a cautionary tale) for students of portfolio theory. In this paper, we describe IPC and offer suggestions for incorporating it into an introductory investments course.
Livingston, Lynda S.. 2013. "Intraportfolio Correlation: an Application for Investments Students." Business Education & Accreditation 5(1): 91-105.