Glossary

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Diversification

Diversification is the method by which investors allocate their liquidity to a wide array of financial instruments that may even have opposing price trends. Depending on the degree of diversification, the risk incumbent in adverse price fluctuations is reduced, but so is the potential return. For the sake of diversification, an equity-based portfolio can, for example, be supplemented with investments in securities based on commodities such as gold, silver or foodstuffs.
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