Diversification is an investment approach, specifically a risk management strategy. Following this theory, a portfolio containing a variety of assets poses less risk and ultimately yields higher returns than one holding just a few.
 | | Term of the Day | Words to Know | | |  | | Diversification | | Diversification is a risk management strategy that mixes a wide variety of investments within a portfolio. The rationale behind this technique is that a portfolio constructed of different kinds of assets will, on average, yield higher long-term returns and lower the risk of any individual holding or security. | | Read More » | | Related to "Diversification" | | | | The Importance Of Diversification | | Diversification is a technique that reduces risk by allocating investments among various financial instruments. Learn how to maximize your return without increasing substantial risk in your portfolio. | | Read More » | | | Portfolio Management | | Portfolio Management involves deciding investment mix and policy, matching investments to goals, asset allocation and balancing risk with performance. | | Read More » | | | Negative Return | | Negative return is characterized by a company's experience of financial loss or lackluster return on an investment during a specific period. | | Read More » | | | Risk | | Risk takes on many forms but is broadly categorized as the chance an outcome or investment's actual return will differ from the expected outcome or return. | | Read More » | | | | | | CONNECT WITH INVESTOPEDIA | | | | | | | |
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