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The benefits of portfolio diversification are highest when the individual securities within the portfolio have returns that: are largely uncorrelated with the rest of the portfolio.

Portfolio diversification is the process of investing your money in a variety of securities and asset classes in order to reduce the portfolio's overall risk. Just consider the results of placing all of your funds in a single security. As long as the stock's performance is favorable, everything will be fantastic.

Find asset classes with low or negative correlations to create a Portfolio diversification such that if one declines, the other tends to offset it. Although choosing asset classes to diversify your portfolio with ETFs and mutual funds is simple, one must be wary of hidden fees and trading charges.

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