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URL:  http://boards.fool.com/you-are-indeed-correct-the-simple-illustration-26107830.aspx

Subject:  Re: CAGR/GSD Limits of Blends Date:  11/16/2007  8:30 PM
Author:  emintz Number:  203977 of 254175

You are indeed correct. The simple illustration is two screens with GSD but low CAGRs that have a correlation coefficient = -1. The blend of these two will have zero variance which also means that the blend CAGR is equal to the arithmetic average of the real-dollar returns – a value that indeed can be larger than either of the constituent CAGR values.

Don't think so on this one also.


Screen 1 Screen 2 Blend
40 0 20
20 30 25
40 0 20
20 30 25
40 0 20
20 30 25


Correlation is -1. Blend does not have zero variance.

Eric
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