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Diversification across companies: Even within niche industries, performance can vary wildly depending on company size (large- or small-cap), maturity (IPO vs. blue chip stock) and business focus ...
If asset prices do not change in perfect synchrony, a diversified portfolio will have less variance than the weighted average variance of its constituent assets, and often less volatility than the least volatile of its constituents. [1] Diversification is one of two general techniques for reducing investment risk. The other is hedging.
The change in valuation can have a big impact on investors’ returns over time. Paying a high multiple initially can wipe out the return from dividends and earnings growth if the valuation ...
A fundamental justification for asset allocation is the notion that different asset classes offer returns that are not perfectly correlated, hence diversification reduces the overall risk in terms of the variability of returns for a given level of expected return. Asset diversification has been described as "the only free lunch you will find in ...
the variance [1] of portfolio returns is the correct measure of investment risk, and; the investment returns of all securities and portfolios can be adequately represented by a joint elliptical distribution, such as the normal distribution.
Entertainment and media conglomerate The Walt Disney Company has much more than just animated films. One of Disney's main strengths is its diverse group of income streams. By creating highly ...
Factor investing is an investment approach that involves targeting quantifiable firm characteristics or "factors" that can explain differences in stock returns. Security characteristics that may be included in a factor-based approach include size, low-volatility, value, momentum, asset growth, profitability, leverage, term and carry. [1] [2] [3]
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