What Is Diversification?
The aim is to limit what any single holding can do to your whole portfolio.
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1.What is diversification?
The aim is to limit what any single holding can do to your whole portfolio.
2.Which risk belongs to one company, such as a lawsuit?
Spreading can reduce it, but systematic risk cannot be eliminated through diversification.
3.What does a correlation of minus 1 mean?
Most real pairs sit somewhere in between.
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Sources (3)
- FINRA: Asset Allocation and Diversification (Investing Basics)
- OpenStax: Principles of Finance, Abschnitt 15.2 Risk and Return to Multiple Assets (Lehrbuch)
- Eigene Rechnung: drei erfundene Koerbe A, T, O
Education only. Not financial advice.