TBDS risk and default correlation

[itsyourz]

what is it becoming risky as default correlation is more negative?

if it is positive 1, then every tranches are regarded same?

i mean, when one of them is default, then all of them is default, due to the default correlation is 1

so in my opinion, this case would be riskier than negative correlation

please let me understand..

thanks!

suk

 

[David Harper CFA FRM]

suk,

Can you take a look at this from yesterday: this thread and this post should help resolve. I think that is your question, if not please advise?

David