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An investor wishes to add another security to his portfolio.

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An investor wishes to add another security to his portfolio. He is looking at a stock that has a correlation with the portfolio of 0.99. What should the advisor tell this investor?

A.

This security will not reduce the risk of the portfolio, as the correlation is too low.

B.

This security will reduce the risk of the portfolio, as the correlation is very low.

C.

This security will reduce the risk of the portfolio, as there is an almost perfect positive correlation.

D.

This security will not reduce the risk of the portfolio, as the correlation is almost positively perfect.

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