Question

true or false

as the correlation between two stocks changes , the shape of investment opportunity set will not change

Answer 1

ANS , TRU

as if 2 assets portfolio are corelated to each other either (perfectly correlated or negative correlated ) the shape doesn't change but the value does for example, there are two stocks in my portfolio stock A and stock B both have positive correlation with each other means if price of A increases the price of B also increases so the shap will be same it doesn't change its sdhampe only the amount can go up or down

even if two assts are negatively correlated with each other it means if porices of A increases leads to decrease in prices of the B . here also shape would remain same only the amount could go up or down.