Diversification (finance)
Process of allocating capital in a way that reduces the exposure to any one particular asset or risk / From Wikipedia, the free encyclopedia
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In finance, diversification is the process of allocating capital in a way that reduces the exposure to any one particular asset or risk. A common path towards diversification is to reduce risk or volatility by investing in a variety of assets. If asset prices do not change in perfect synchrony, a diversified portfolio will have less variance than the weighted average variance of its constituent assets, and often less volatility than the least volatile of its constituents.[1]
Diversification is one of two general techniques for reducing investment risk. The other is hedging.