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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 MatchesDiversificationDiversificationDividing investment funds among a variety of securities with different risk, reward, and correlation statistics so as to minimize unsystematic risk. Sector diversificationSector diversificationConstituting of a portfolio of stocks of companies in each major industry group. Efficient diversificationEfficient diversificationThe organizing principle of modern portfolio theory, which maintains that any risk-averse investor will search for the highest expected return for any particular level of portfolio risk. Unique Diversification BenefitUnique Diversification BenefitReduction in the likelihood of financial distress for a conglomerate firm that comes with its diversified investments. Indirect diversification benefitsIndirect diversification benefitsDiversification benefits provided by the multinational corporation that are not available to investors through their portfolio investment. Further SuggestionsInternational diversificationdiversification Cone of diversification Currency diversification Principle of diversification Liquidity diversification Markowitz diversification Diversification cone |
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