Systematic Risk and the Equity Risk Premium - The Volatility of a Portfolio

4 important questions on Systematic Risk and the Equity Risk Premium - The Volatility of a Portfolio

What is the volatility of a portfolio and how is it measured?

The total risk, measured as standard deviation

What does the correlation of two shares measure?

The degree in which they share common risk

The correlation between two stocks takes on values ranging from -1, 0 to 1. What do these three extremes imply?

Correlation of 1 is they move together, 0 implies no relationship and -1 means perfect opposite directions
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What is the special property of a equally weighted portfolio?

That all stocks have the same dollar amount invested

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