Re: Mental Models-Orthogonality & Portfolio Diversification.
I relate the mathematical concept of Orthogonality to Portfolio Diversification.
Everyone in finance understands the broad concept of Portfolio Diversification. Whether you’re talking about a portfolio of stocks or a portfolio of managers or even a portfolio of asset classes, the general idea is that picking assets with low (or even negative) correlations with each other can lower the volatility of the overall portfolio without sacr…
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