Final answer:
Correlation is the statistic that measures how the returns of two risky assets move together and is crucial in making decisions regarding the tradeoff between risk and return for portfolio diversification.
Step-by-step explanation:
The statistic that measures how the returns of two risky assets move together is known as correlation. When evaluating investment choices, understanding the correlation between assets can be crucial for portfolio diversification. In the context of investments, a positive correlation indicates that the assets tend to move in the same direction, whereas a negative correlation means they usually move in opposite directions. This concept is key when investors seek the tradeoff between risk and return, attempting to optimize their portfolios for the best possible outcomes over various time frames.