shokha

Please explain that how diversification can reduce Unsystematic Risk of a given portfolio?

Hi community! I would be very grateful if someone could help me with this question.
Add a comment
0%

6 replies

techy
"Diversification and the Elimination of Unsystematic Risk: - The purpose of diversification is to reduce the standard deviation of the total portfolio - This assumes that imperfect correlations exist among securities - As the number of securities added to a portfolio increases , the average covariance for the portfolio declines. Source: http://in.docsity.com/en-docs/Markowitz_Portfolio_Theory_-_Security_Analysis_and_Portfolio_Management_-_Solved_Quiz_"
Add a comment
asavari
"Firm or maybe business particular risk that is untouched in each purchase. The amount of unsystematic peril can be rock-bottom as a result of ideal variation. "
Add a comment