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Many investors have learned the harmful effects of under diversification and mistakenly believe that the more diversification the better. This concept is totally false.

Use investment diversification of non-correlated assets to minimize unsystematic risk. This is the only "free ride" available to portfolio managers.

Including diversification rules in your risk management plan will lower the volatility of your portfolio without lowering your expected returns.

Including diversification rules in your risk management plan will lower the volatility of your portfolio without lowering your expected returns.

Definition, examples, and advantages of investment portfolio diversification are examined with the purpose of risk management and portfolio optimization.