Diversification works in one's portfolio because stock returns in one's portfolio do not always move in the same direction;as a result,the upswings and downturns in one's portfolio eliminate one another.

Question

Quizplus · Accepted Answer

Diversification works by investing in different assets or securities that have low correlation with each other. This means that when one stock or asset is going down, another may be going up, thereby helping to balance out the overall return of the portfolio. By reducing the risk through diversification, investors can potentially achieve a more steady, long-term growth of their investments.

Diversification Works in One's Portfolio Because Stock Returns in One's