If New Assets SR > Portfolio SR * Correlation between Asset and Portfolio, then Add If they don’t give you correlation, the if New Asset SR>Portfolio SR then add.
Why not use New Assets SR * Correlation > Portfolio SR to make the judgment?
If New Assets SR > Portfolio SR * Correlation between Asset and Portfolio, then Add If they don’t give you correlation, the if New Asset SR>Portfolio SR then add.
Why not use New Assets SR * Correlation > Portfolio SR to make the judgment?
If correlation between the new asset and your portfolio is lower then the benefit to your risk adjusted returns (SR) will be greater
This is no longer in the curriculum.