Editing Diversification (finance)
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Diversification is one of two general techniques for reducing investment risk. The other is [[hedge (finance)|hedging]]. |
Diversification is one of two general techniques for reducing investment risk. The other is [[hedge (finance)|hedging]]. |
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The risk reduction from diversification does not mean anyone else has to take more risk. If person A owns $10,000 of one stock and person B owns $10,000 of another, both A and B will reduce their risk if they exchange $5,000 of the two stocks, so each now has a more diversified portfolio.<ref>{{cite book |
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| last = Sharpe |
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| first = William |
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| authorlink = William Forsyth Sharpe |
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| coauthors = Gordon J. Alexander, Jeffrey W. Bailey |
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| title = Investments |
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| publisher = Prentice Hall |
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| date = October 30, 1998 |
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| isbn = 978-0130101303}}</ref> |
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==Examples== |
==Examples== |