A company that operates and/or invests in several different business sectors. A diversified company exists to reduce unsystematic risk; that is, when one industry is doing poorly, a diversified company may still do well if its other industries are performing well. As a result, stock in a diversified company is generally more stable than the average stock. See also: Conglomerate merger.
A company engaged in varied business operations not directly related to one another. A diversified company is less likely to suffer either a collapse or a spectacular gain in earnings compared with a firm concentrating its operations in a single business. Likewise, the stock of a diversified company is unlikely to bring extraordinarily large gains or losses to its shareholders.