Word Pronunciation & Dictionary

magic of diversification

Word Rarity Rare

Frequency: Zipf frequency 3.21 in modern English

Syllables: mag-ic of -di-ver-si-fi-ca-tion
IPA

39

Scrabble Score

22

Letters

8

Syllables

14

Unique Chars

Meaning

noun

The effective reduction of risk of a portfolio, achieved without reduction to expected returns through the combination of assets with low or negative correlations.

Uncountable

Example Sentences

"One reason why banks engage in securitization is to spread around risk like jelly on toast. Instead of lumping the jelly on one small piece of the toast, leaving all the reward (or risk that it falls off the toast) for one bite, it's evenly distributed, making for lots more tasty bites—and, through the quant magic of diversification (spreading the jelly), less risk."

Usage

Uncountable

Questions

What does magic of diversification mean?: The effective reduction of risk of a portfolio, achieved without reduction to expected returns through the combination of assets with low or negative correlations.

How to pronounce magic of diversification

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