INTRAPORTFOLIO CORRELATION: AN APPLICATION FOR INVESTMENTS STUDENTS

Lynda S. Livingston

Business Education and Accreditation, 2013, vol. 5, issue 1, 91-105

Abstract: Intraportfolio correlation (IPC), a measure of portfolio diversification, is becoming increasingly popular among investment practitioners. However, despite the assertions of these adherents, IPC is far from a free lunch. Instead, it is a simplistic and flawed measure that ignores material information about the relationships among portfolio assets. Deconstructing the IPC therefore can be a productive and educational exercise (and a cautionary tale) for students of portfolio theory. In this paper, we describe IPC and offer suggestions for incorporating it into an introductory investments course.

Keywords: Portfolio Theory; Diversification; Finance Pedagogy (search for similar items in EconPapers)
JEL-codes: G10 G11 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (3)

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