diversification
DefinitionA portfolio strategy designed to reduce exposure to risk by combining a variety of investments, such as stocks, bonds, and real estate, which are unlikely to all move in the same direction. The goal of diversification is to reduce the risk in a portfolio. Volatility is limited by the fact that not all asset classes or industries or individual companies move up and down in value at the same time or at the same rate. Diversification reduces both the upside and downside potential and allows for more consistent performance under a wide range of economic conditions.
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diversification is ...
... part of the Strategies subject.
... part of the Strategies subject.
... an essential investing term.
Related Terms
global fund, market risk, mutual fund, nondiversifiable risk, open-end fund, specialized fund, systematic risk, undiversifiable risk, unsystematic risk, world fund
diversification appears in the definitions of these other terms on BusinessDictionary.com
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