diversification
/daɪˌvɜːrsɪfɪˈkeɪʃən/
spreading investments across different assets, sectors, or geographies to reduce risk
diversification in a sentence
“Diversification across 12 sectors meant one bad industry could not sink his portfolio.”
Origin of diversification
Latin diversificare to make diverse, from diversus different + facere to make
Related Words
drawdown
the peak-to-trough decline in a portfolio's value during a specific period
risk-reward ratio
the expected profit of a trade compared to its potential loss, used to evaluate trade quality
stop-loss order
an order to sell a security automatically when it reaches a specified price, limiting downside loss
limit order
an order to buy or sell a security only at a specified price or better
dollar-cost averaging
investing a fixed dollar amount at regular intervals regardless of price, reducing the impact of volatility
rebalancing
adjusting a portfolio back to its target asset allocation by buying and selling assets