Diversification Definition

Diversification is a risk management strategy that spreads investments across different assets to reduce exposure to any single one.

What is Diversification?

By holding a mix of asset classes, sectors, or regions, diversification aims to reduce the impact of poor performance in any one area.

It does not eliminate risk but can help smooth overall portfolio volatility.

An investor holding stocks, bonds, and commodities rather than a single stock is practicing diversification.

Day trading is a strategy where positions are opened and closed within the same trading day.

A dealing desk is a broker execution model where client orders are processed internally rather than sent directly to external liquidity providers.

A debenture is a type of unsecured bond backed only by the general creditworthiness of the issuer rather than specific collateral.