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What is Portfolio Diversification

The holding of a range of assets across firms, sectors, countries or regions in a portfolio in order to diversify risk. Provided that the risks associated with each asset are not strongly positively related, a diversified portfolio will tend to have less overall risk than its individual components.

Crown Copyright. Material taken from HM-Treasury. Reproduced under the terms and conditions of the Click-Use Licence.

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Term created / updated 2007-03-29 15:56:35

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