Portfolio Variance & Diversification: How Correlation Cuts Risk | CFA® Program Level I

Portfolio variance and diversification explained visually: weights, covariance, correlation and the two-asset formula. ▶ Try a full module of our Level I platform free: https://sharpeandclear.com/go/ef1 ▶ The full Level I course, all 10 topics: https://sharpeandclear.com/?src=yt-ef1 ▶ Next lesson: the minimum-variance portfolio and the efficient frontier:    • Minimum-Variance Portfolio & the Efficient...   ▶ Full series:    • Portfolio Theory, Explained Visually: Dive...   ▶ All Level I Quantitative Methods videos:    • Level I Quantitative Methods, Explained Vi...   Chapters 0:00 Intro: two risky stocks, less risk? 1:03 Our platform 1:41 A portfolio's expected return: a weighted average 3:16 Risk: variance, covariance and correlation 5:36 Two-asset portfolio variance and standard deviation 9:01 How correlation drives diversification: from +1 to −1 10:46 Three assets, many assets: the risk that stays 12:49 Exam-style practice question 13:58 Recap: portfolio risk on one card For CFA® Program Level I candidates and finance students: a portfolio's expected return and risk from one picture, every term defined (weights, standard deviation, covariance, correlation, the two-asset formula, specific and market risk); what to learn by heart, and an exam-style practice question. Educational content only, not investment advice. Illustrative data: invented stocks and funds. Not affiliated with or endorsed by CFA Institute. CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute. #PortfolioTheory #Diversification #QuantFinance