This is a means of spreading your investment around other available portfolios to avoid the effect of price volatility on your investment. Diversification in the stock market is used to reduce risk and to maximize the return from the various available investment opportunities. Most successful investors and investment advisors would agree that although diversification does not shield the investor against loss, it is an easy way to reach one’s financial goal while at the same time minimizing the level of risk. Diversification does not guarantee that the investors would not face any risk, rather it shields investors from the dangers…
Source: What Is Diversification?
What Is Diversification?