No risk reduction
Overlapping area represents the amount of risk that can be diversified away by holding EURONEXT BEL-20 and Stockholm in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Stockholm and EURONEXT BEL-20 is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on EURONEXT BEL-20 are associated (or correlated) with Stockholm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stockholm has no effect on the direction of EURONEXT BEL-20 i.e. EURONEXT BEL-20 and Stockholm go up and down completely randomly.