It allows him to make informed decisions about his investment. This theory also explains the trade-off between maximizing returns and minimizing the risk associated with the return. According to Bartvold and Begg, “The basic premise of portfolio theory is that the variance of returns for a portfolio of risky assets is a function not only of the variance of each individual asset, but also of the covariance [or correlation] between each asset ( the variance of the return, or standard deviation of the return, can be considered a measure of economic risk). When multiple risky assets are held within a portfolio, some properties can be expected to increase in value while at the same time others decrease in value. By holding risky assets in groups, some of the risk of each asset can be reduced or eliminated through the process