A well-diversified portfolio reduces overall risk by combining assets with low or negative correlations, which smooths out performance because when one asset's return is down, another may be up.

Authors

• Person: Not available Organization: Pressbooks
  Chapter 8 – Risk and Return – Fundamentals of Finance

Sources

• Chapter 8 – Risk and Return – Fundamentals of Finance pressbooks.pub Pressbooks via serper

Referenced by nodes (2)

• risk concept
• diversified portfolio concept