Lesson Overview

Uncorrelated Industries/Sectors

It's no secret that diversification is an important part of being successful trading in the stock market. But when it comes to trading options it's important not only to diversify your positions among different stocks, but to diversify them among uncorrelated assets.

An example of uncorrelated asset classes would be social media and oil stocks. When social media stocks go down it should conceivably have very little impact on what oil stocks do in the future. Therefore the positions in both sectors over true diversification.

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