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An Introduction to Diversification

Options Jive

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Traditional finance reminds us that it's prudent to diversify our portfolios...that we should never put all of our eggs in one basket. It's good practice to split up our eggs across multiple baskets.

To examine this idea, the research team conducted a study that compared the risk/return profile of a few single stocks versus a portfolio that was evenly allocated across all those same stocks. What we see is that diversification does indeed leave us with a more balanced risk/return profile.

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