Add Investment to Portfolio

CFA Level III Portfolio Management
#1

If Sharpe ratio of the investment > Sharpe ratio of the portfolio * correlation of investment and portfolio returns, its safe to conclude adding the investment to the portfolio will increase the Sharpe ratio of the portfolio.

Can someone please logically or mathematically explain how / why, by multiplying the correlation of the investment and portfolio return to the sharpe ratio of the portfolio, can we conclude it will improve the portfolio sharpe ratio

#2

http://www.analystforum.com/forums/cfa-forums/cfa-level-iii-forum/91279077

#3

since this was also a LOS of L1. i think the only thing to remember is non-normal distributions mess up the rule.

#4

I’d say that that until your bring in house some added-value product whose correlation with your current ptf is less than 1 well that’s all good