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?

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

View Answer

Answer: C