Principle of diversification
That portfolios of different sorts of assets differently correlated with one another will have negligible unsystematic risk. In other words, unsystematic risks disappear in diversified portfolios, and only systematic risks persist, those related to particular assets.
Nearby TermsPrincipal-agent relationship Principal-only (PO) Principle of diversification Print Priority
Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University