What is DIVERSIFICATION

A spreading or dispersion of RISK, achievable by combining ASSETS or exposures that are not CORRELATED with one another; the process of diversification helps minimize concentrations of exposure and creates a more balanced set of risks. Ultimately, the risk of a diversified PORTFOLIO depends on the amount of risk that cannot be eliminated, i.e., NONDIVERSIFIABLE RISK, which is often measured by BETA, or the sensitivity of an investment