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By diversifying across assets with low or negative correlation, investors aim to create a balanced portfolio where the performance of one asset can offset losses in another. This strategy is similar to spreading one's risk across different baskets, thus reducing the overall volatility of the portfolio. Consider a scenario where an individual invests in two assets with inverse correlations; when one asset experiences a decline, the other may potentially generate positive returns, helping to reduce the overall impact on the portfolio. In this article, we’ll cover how to build a diversified mutual fund SIP portfolio.
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