Is it possible to reduce the risk by adding a security with a higher risk to a security with a lower risk that is already held?

Posted by: Pdfprep Category: GLO_CWM_LVL_1 Tags: , ,

Is it possible to reduce the risk by adding a security with a higher risk to a security with a lower risk that is already held?
A . No, the total risk after the addition will be higher
B . The new security will have no impact in reducing the risk
C . Yes, provided both the securities are negatively correlated
D . Yes, provided both the securities are positively correlated to each other

Answer: C