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Diversification (finance)

Index Diversification (finance)

In finance, diversification is the process of allocating capital in a way that reduces the exposure to any one particular asset or risk. [1]

40 relations: Asset, Beta (finance), Bible, Capital asset pricing model, Central limit theorem, Coherent risk measure, David Kabiller, Dollar cost averaging, Ecclesiastes, Ed Elton, Emerging markets, Equity repositioning, Expected return, Expected value, Financial correlation, Financial risk, Harry Markowitz, Hedge (finance), Index (economics), Index fund, Institutional investor, Investment, Journal of Financial and Quantitative Analysis, Market portfolio, Market risk, Modern portfolio theory, Outline of finance, Portfolio (finance), Rate of return, Real estate, S&P 500 Index, Stanford University, Systematic risk, Talmud, The Journal of Business, The Merchant of Venice, Variance, Weighted arithmetic mean, William F. Sharpe, Yale School of Management.


In financial accounting, an asset is an economic resource.

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Beta (finance)

In finance, the beta (β or beta coefficient) of an investment indicates whether the investment is more or less volatile than the market as a whole.

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The Bible (from Koine Greek τὰ βιβλία, tà biblía, "the books") is a collection of sacred texts or scriptures that Jews and Christians consider to be a product of divine inspiration and a record of the relationship between God and humans.

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Capital asset pricing model

In finance, the capital asset pricing model (CAPM) is a model used to determine a theoretically appropriate required rate of return of an asset, to make decisions about adding assets to a well-diversified portfolio.

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Central limit theorem

In probability theory, the central limit theorem (CLT) establishes that, in some situations, when independent random variables are added, their properly normalized sum tends toward a normal distribution (informally a "bell curve") even if the original variables themselves are not normally distributed.

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Coherent risk measure

In the fields of actuarial science and financial economics there are a number of ways that risk can be defined; to clarify the concept theoreticians have described a number of properties that a risk measure might or might not have.

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David Kabiller

David G. Kabiller (born 1964) is the founder, founding principal, and head of business development of AQR Capital Management, along with Cliff Asness, John M. Liew and Robert Krail.

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Dollar cost averaging

Dollar cost averaging (DCA) is an investment strategy with the goal of reducing the impact of volatility on large purchases of financial assets such as equities.

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Ecclesiastes (Greek: Ἐκκλησιαστής, Ekklēsiastēs, קֹהֶלֶת, qōheleṯ) is one of 24 books of the Tanakh or Hebrew Bible, where it is classified as one of the Ketuvim (or "Writings").

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Ed Elton

Edwin Elton (born October 5, 1939) is a Nomura Professor of Finance at New York University Stern School of Business and Academic Director of the Stern Doctoral Program.

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Emerging markets

An emerging market is a country that has some characteristics of a developed market, but does not meet standards to be a developed market.

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Equity repositioning

Equity Repositioning is the financial strategy of taking an equity rich asset base and repositioning those assets into a diversity of investment vehicles.

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Expected return

The expected return (or expected gain) on a financial investment is the expected value of its return (of the profit on the investment).

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Expected value

In probability theory, the expected value of a random variable, intuitively, is the long-run average value of repetitions of the experiment it represents.

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Financial correlation

Financial correlations measure the relationship between the changes of two or more financial variables over time.

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Financial risk

Financial risk is any of various types of risk associated with financing, including financial transactions that include company loans in risk of default.

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Harry Markowitz

Harry Max Markowitz (born August 24, 1927) is an American economist, and a recipient of the 1989 John von Neumann Theory Prize and the 1990 Nobel Memorial Prize in Economic Sciences.

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Hedge (finance)

A hedge is an investment position intended to offset potential losses or gains that may be incurred by a companion investment.

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Index (economics)

In economics and finance, an index is a statistical measure of changes in a representative group of individual data points.

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Index fund

An index fund (also index tracker) is a mutual fund or exchange-traded fund (ETF) designed to follow certain preset rules so that the fund can a specified basket of underlying investments.

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Institutional investor

An institutional investor is an entity which pools money to purchase securities, real property, and other investment assets or originate loans.

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In general, to invest is to allocate money (or sometimes another resource, such as time) in the expectation of some benefit in the future – for example, investment in durable goods, in real estate by the service industry, in factories for manufacturing, in product development, and in research and development.

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Journal of Financial and Quantitative Analysis

The Journal of Financial and Quantitative Analysis is a peer-reviewed bimonthly academic journal published by the Michael G. Foster School of Business at the University of Washington in cooperation with the W. P. Carey School of Business at Arizona State University and the University of North Carolina's Kenan-Flagler Business School.

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Market portfolio

Market portfolio is a portfolio consisting of a weighted sum of every asset in the market, with weights in the proportions that they exist in the market, with the necessary assumption that these assets are infinitely divisible.

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Market risk

Market risk is the risk of losses in positions arising from movements in market prices.

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Modern portfolio theory

Modern portfolio theory (MPT), or mean-variance analysis, is a mathematical framework for assembling a portfolio of assets such that the expected return is maximized for a given level of risk.

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Outline of finance

The following outline is provided as an overview of and topical guide to finance: Finance – addresses the ways in which individuals and organizations raise and allocate monetary resources over time, taking into account the risks entailed in their projects.

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Portfolio (finance)

In finance, a portfolio is a collection of investments held by an investment company, hedge fund, financial institution or individual.

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Rate of return

In finance, return is a profit on an investment.

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Real estate

Real estate is "property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more generally) buildings or housing in general.

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S&P 500 Index

The Standard & Poor's 500, often abbreviated as the S&P 500, or just the S&P, is an American stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ.

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Stanford University

Stanford University (officially Leland Stanford Junior University, colloquially the Farm) is a private research university in Stanford, California.

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Systematic risk

In finance and economics, systematic risk (in economics often called aggregate risk or undiversifiable risk) is vulnerability to events which affect aggregate outcomes such as broad market returns, total economy-wide resource holdings, or aggregate income.

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The Talmud (Hebrew: תַּלְמוּד talmūd "instruction, learning", from a root LMD "teach, study") is the central text of Rabbinic Judaism and the primary source of Jewish religious law and theology.

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The Journal of Business

The Journal of Business was an academic journal published by the University of Chicago Press.

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The Merchant of Venice

The Merchant of Venice is a 16th-century play written by William Shakespeare in which a merchant in Venice must default on a large loan provided by a Jewish moneylender.

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In probability theory and statistics, variance is the expectation of the squared deviation of a random variable from its mean.

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Weighted arithmetic mean

The weighted arithmetic mean is similar to an ordinary arithmetic mean (the most common type of average), except that instead of each of the data points contributing equally to the final average, some data points contribute more than others.

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William F. Sharpe

William Forsyth Sharpe (born June 16, 1934) is an American economist.

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Yale School of Management

The Yale School of Management (also known as Yale SOM) is the graduate business school of Yale University and is located on Whitney Avenue in New Haven, Connecticut, United States.

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[1] https://en.wikipedia.org/wiki/Diversification_(finance)

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