Building a Diversified Portfolio. How to Get Real Diversification! Correlation Coefficients Matter.

Many investors assume that by investing in a pie chart they are automatically diversified. Then a crash occurs and the discover they were not nearly as diversified as they thought they were. In this video I show the foundation for diversifying investments and asset classes in a portfolio; correlation coefficients. Learning and understanding what role correlation coefficients play in a diversified portfolio can help you greatly improve your own diversified portfolio.
This video is for educational and illustrative purposes and is not financial advice. Your broker or advisor will charge you fees or commissions to make investments and therefore your returns will be less than indexes. For example, if you invest in the S&P 500 ETF, SPY, you will pay a fee to the company managing the ETF, State Street Global Advisors. Your return on the S&P 500 ETF, SPY, will be less than the S&P 500 Index TR because of the fee paid to State Street Global Advisors. Consult your advisor or broker for a detailed list of their fees or commissions before you invest. Investing involves risk and you can lose money.