Series 65: 5.3.4.1. Diversification

Taken from our Series 65 Online Guide

5.3.4.1. Diversification

There is perhaps no more well-known portfolio management technique than the basic concept of diversification. As the name implies, diversification is the process of making a portfolio that is over-concentrated in just a few positions more diverse with the goal of minimizing the portfolio’s unsystematic risk. In doing so, the client seeks to reduce the possibility that poor performance in one position will destroy an entire portfolio’s return. One strategy for achieving diversification is the buying of uncorrelated or negatively correlated assets, or assets that do not have a history of moving in the same direction at the same time. Uncorrelated asset

Since you're reading about Series 65: 5.3.4.1. Diversification, you might also be interested in:

Solomon Exam Prep Study Materials for the Series 65
Please Enable Javascript
to view this content!