Diversification means to lower your investment risk with a variety of different investments in your portfolio. Doing so will enable you to limit exposure to volatility in specific stocks. Say you have two stocks in your portfolio with equal weights. If one stock drops by 10% while other stock stays flat, the overall portfolio performance will only drop by 5%.
Read more about diversification on our blog here.
Written by Mohamad Daou
Updated over 3 years ago