Principle of diversification

Principle of diversification

That portfolios of different sorts of assets differently correlated with one another will have negligible unsystematic risk. In other words, unsystematic risks disappear in diversified portfolios, and only systematic risks persist, those related to particular assets.

Principle of Diversification

A principle of investing stating that a portfolio containing many different assets and kinds of assets carries lower risk than a portfolio with only a few. The principle of diversification states that unsystemic risk may be alleviated through diversification, but systemic risk is more difficult to reduce. That is, the risk associated with a single investment or type of investment may be offset by the risk of another investment or type of investment. See also: Diversification.
References in periodicals archive ?
Pakistan embraces the principle of diversification rather than being proponent of the obsolete concept of non-alignment or totally side China or America.
America and South Asia cauldron
Raed al Khalaf, chairman of Al Raed Fresh Foods, said: "We look forward to expanding our business and investing in a wider range of Philippine food products based on the principle of diversification of resources to meet the needs of the Qatari market and the Filipino community in Qatar."
Qatar, Philippine firms explore investment opportunities at food security meet
Both of these mainstream views, as I will refer to them--the traditional view that matter is the principle of diversification and the view that form is the principle of diversification--agree that numerical diversification is underived at some level in the order of composition: the level of matter for the traditional view; the level of form for the other view.
The primacy of the organism: being, unity, and diversification in Aristotle's metaphysics
For example, the bank would be unlikely to put nearly $5 million into an investment without the board's approval, because that's too large a sum to place in any one investment, according to the principle of diversification, Levear said.
UO plans own banking operation
The principle of diversification applies to managing a business as it does to managing a portfolio.
The enduring advisory firm: the advisory firm of the future is building a business based on tomorrow's clients and employees
The affects of an economic recession and the recent Arab Spring which has led to political and social changes in the region, with the resulting fluctuating oil prices has led many in the region to realise the importance of enhancing the principle of diversification of wealth sources so as to meet the requirements of the GCC economic integration and growth.
Oil takes hold 80 per cent of general Gulf expenditure
At the core of asset acquisition, revision, and rebalancing of asset holdings is the principle of diversification, and that is well-recorded in the existing literature.
Asset acquisition, diversification, and revision-theoretic exercises in portfolio theory
"The principle of diversification is still working to cushion a part of the decline, but not to the same degree that it did five or six or seven years ago," Scudder said.
Even Harvard and other elite institutions are feeling pinch as healthy endowments wither in stock market meltdown
"In addition, they understand the principle of diversification as a means to reduce portfolio risk."
Alternative investments can enhance portfolio returns and lessen volatility
The principle of diversification is to spread your investments, and therefore your risk, by investing in several industries, such as financial, health care and technology.
Rules to live and invest by
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