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 Glossary   >   D   >   "Diversification" Definition   

        Diversification

Dividing investment funds among a variety of securities with different risk, reward, and correlation statistics so as to minimize unsystematic risk.

A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance.

Investment jargon for not keeping all your eggs in one basket. Diversification implies that you distribute your capital among various assets to reduce loss if, through bad luck or judgement, one of them fails you.There are four main areas of risk to think about.Asset allocation: spreading your investments among different classes of asset (bonds, equities, property etc)Shares: spreading your stock investments over a sufficient number of shares (or invest in a diversified collective fund)Sectors: making sure the shares you invest in are in companies operating in a variety of sectorsCountries: getting some exposure to economies outside the UK as well as in the UKMost people agree that diversification is essential to reduce risk. There is an argument that to make exceptional returns, you have to concentrate your investments - the big winners theory. "Put all your eggs in one basket and watch that basket very closely".

Diversification
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Diversification - Dividing investment funds among a variety of securities with different risk, reward, and correlation statistics so as to minimize unsystematic risk.

A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance.

Investment jargon for not keeping all your eggs in one basket. Diversification implies that you distribute your capital among various assets to reduce loss if, through bad luck or judgement, one of them fails you.There are four main areas of risk to think about.Asset allocation: spreading your investments among different classes of asset (bonds, equities, property etc)Shares: spreading your stock investments over a sufficient number of shares (or invest in a diversified collective fund)Sectors: making sure the shares you invest in are in companies operating in a variety of sectorsCountries: getting some exposure to economies outside the UK as well as in the UKMost people agree that diversification is essential to reduce risk. There is an argument that to make exceptional returns, you have to concentrate your investments - the big winners theory. "Put all your eggs in one basket and watch that basket very closely".


Diversification : dividing investment funds among a variety of securities with different risk, reward, and correlation statistics so as to minimize unsystematic risk.

a risk management technique that mixes a wide variety of investments within a portfolio. it is designed to minimize the impact of any one security on overall portfolio performance.

investment jargon for not keeping all your eggs in one basket. diversification implies that you distribute your capital among various assets to reduce loss if, through bad luck or judgement, one of them fails you.there are four main areas of risk to think about.asset allocation: spreading your investments among different classes of asset (bonds, equities, property etc)shares: spreading your stock investments over a sufficient number of shares (or invest in a diversified collective fund)sectors: making sure the shares you invest in are in companies operating in a variety of sectorscountries: getting some exposure to economies outside the uk as well as in the ukmost people agree that diversification is essential to reduce risk. there is an argument that to make exceptional returns, you have to concentrate your investments - the big winners theory. "put all your eggs in one basket and watch that basket very closely".