Diversification

Diversification,

Definition of Diversification:

  1. Diversification strives to smooth out unsystematic risk events in a portfolio, so the positive performance of some investments neutralizes the negative performance of others. The benefits of diversification hold only if the securities in the portfolio are not perfectly correlated—that is, they respond differently, often in opposing ways, to market influences.

  2. The action of diversifying something or the fact of becoming more diverse.

  3. Investing: Spreading the available funds over a wider selection (portfolio) of types of investment, such as commodities, real estate, securities.

  4. Corporate strategy: Practice under which a firm enters an industry or market different from its core business. Reasons for diversification include (1) reducing risk of relying on only one or few income sources, (2) avoiding cyclical or seasonal fluctuations by producing goods or services with different demand cycles, (3) achieving a higher growth rate, and (4) countering a competitor by invading the competitors core industry or market. In contrast to vertical integration, diversification does not increase a firms market or monopolistic power. Also called market diversification.

  5. Diversification is a risk management strategy that mixes a wide variety of investments within a portfolio. A diversified portfolio contains a mix of distinct asset types and investment vehicles in an attempt at limiting exposure to any single asset or risk. The rationale behind this technique is that a portfolio constructed of different kinds of assets will, on average, yield higher long-term returns and lower the risk of any individual holding or security.

  6. Banking: Spreading a banks assets (loans) over a wider assortment of quality borrowers, to maintain or improve earning levels while maintaining the same level of exposure.

Synonyms of Diversification

Proteus, About-face, Accommodation, Adaptation, Adjustment, Allotropism, Allotropy, Alteration, Amelioration, Analysis, Anatomization, Apostasy, Atomization, Betterment, Break, Capriciousness, Change, Change of heart, Changeability, Changeableness, Choppiness, Constructive change, Continuity, Conversion, Dappleness, Defection, Degeneration, Degenerative change, Demarcation, Desynonymization, Deterioration, Deviation, Difference, Differencing, Differentiation, Discontinuity, Discrimination, Disequalization, Disjunction, Disorder, Distinction, Distinguishment, Divarication, Divergence, Diversion, Diversity, Division, Fitting, Flip-flop, Gradual change, Her infinite variety, Heterogeneity, Heteromorphism, Improvement, Inconsistency, Inconstancy, Individualization, Individuation, Inequality, Instability, Irregularity, Jerkiness, Manifoldness, Melioration, Mercuriality, Mitigation, Modification, Modulation, Motleyness, Multifariousness, Multiplicity, Mutability, Nonconformism, Nonconformity, Nonstandardization, Nonuniformity, Omnifariousness, Omniformity, Overthrow, Particularization, Personalization, Pluralism, Polymorphism, Qualification, Radical change, Raggedness, Re-creation, Realignment, Redesign, Reform, Reformation, Remaking, Renewal, Reshaping, Restructuring, Reversal, Revival, Revivification, Revolution, Segregation, Separation, Severalization, Severance, Shapeshifter, Shift, Specialization, Sudden change, Switch, Total change, Transition, Turn, Turnabout, Unconformism, Unconformity, Unevenness, Unorthodoxy, Unsteadiness, Upheaval, Variability, Variation, Variegation, Variety, Variousness, Versatility, Violent change, Wavering, Worsening

How to use Diversification in a sentence?

  1. Having a wide range of diversification in a retirement portfolio is an ideal method of maintaining a safety net of constant funds and being able to take advantage of market upswings at the same time.
  2. Growers should start planning diversification of crops.
  3. Diversification limits portfolio risk but can also mitigate performance, at least in the short term.
  4. Diversification is a strategy that mixes a wide variety of investments within a portfolio.
  5. The diversification process was rather easy and it allowed more groups to be represented rather than the more popular ones.
  6. The diversification of funds was a great choice made my our financial department so we diversified our wealth intelligently and profitably.
  7. Portfolio holdings can be diversified across asset classes and within classes, and also geographically—by investing in both domestic and foreign markets.

Meaning of Diversification & Diversification Definition