Final answer:
A correlation of 0.00 indicates no linear relationship between two investment categories, not that their returns move in completely opposite directions. A correlation coefficient of 0.00 signifies the weakest possible relationship.
Step-by-step explanation:
False. A correlation of 0.00 between two investment categories does not mean that the returns of the two categories move in completely opposite directions.
Instead, a correlation coefficient of 0 indicates that there is no linear relationship between the returns of the two investment categories. In other words, the returns of one investment category do not predict or influence the returns of the other category in any systematic way.
A positive correlation (0 < r < 1) means that the returns move in the same direction, and a negative correlation (-1 < r < 0) means they move in opposite directions.
Therefore, the closer the correlation coefficient is to +1 or -1, the stronger the relationship between the variables. When the correlation coefficient is close to zero, it indicates the weakest relationship.