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.