Understanding Portfolio Diversification

In the context of portfolio management, diversification is a risk management strategy that mixes a wide variety of investments within a portfolio. The primary goal of diversification is to minimize the impact of any single security's performance on the overall portfolio. Consider the following statements regarding portfolio diversification:

1. Diversification can eliminate all types of investment risk.

2. The benefits of diversification increase with the number of different investments held in a portfolio until a certain point.

3. All assets have the same correlation with one another, which affects the effectiveness of diversification.

Based on these statements, which of the following is a true statement regarding portfolio diversification?