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Investing Glossary:
Principle of diversification
Copyright 2009,
Campbell R. Harvey. All Rights Reserved.
Do not reproduce without explicit permission.
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| Term: |
| Principle of diversification
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| Definition: |
| 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.
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