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Naive diversification |
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Naive diversificationA strategy whereby an investor simply invests in a number of different assets in the hope that the variance of the expected return on the portfolio is lowered. In contrast, mathematical programming can be used to select the best possible investment weights. Related: Markowitz diversification.Naive diversification Similar MatchesCurrency diversificationCurrency diversificationUsing more than one currency as an investing or financing strategy. Exposure to a diversified currency portfolio typically entails less exchange rate risk than if all the portfolio exposure were in a single foreign currency. Markowitz diversificationMarkowitz diversificationA strategy that seeks to combine in a portfolio assets with returns that are less than perfectly positively correlated, in an effort to lower portfolio risk (variance) without sacrificing return. Related: Naive diversification. Sector diversificationSector diversificationConstituting of a portfolio of stocks of companies in each major industry group. DiversificationDiversificationDividing investment funds among a variety of securities with different risk, reward, and correlation statistics so as to minimize unsystematic risk. International diversificationInternational diversificationThe attempt to reduce risk by investing in more than one nation. By diversifying across nations whose economic cycles are not perfectly correlated, investors can typically reduce the variability of their returns. Further SuggestionsCone of diversificationLiquidity diversification Indirect diversification benefits diversification Efficient diversification Unique Diversification Benefit Principle of diversification Diversification cone |
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