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Economic diversity or economic diversification refers to variations in the economic status or the use of a broad range of economic activities in a region or country. [1] Diversification is used as a strategy to encourage positive economic growth and development. [ 2 ]
How diversification benefits you Diversification has several benefits for you as an investor, but one of the largest is that it can actually improve your potential returns and stabilize your results.
Bekkers, Doeswijk and Lam (2009) investigate the diversification benefits for a portfolio by distinguishing ten different investment categories simultaneously in a mean-variance analysis as well as a market portfolio approach. The results suggest that real estate, commodities, and high yield add the most value to the traditional asset mix of ...
Economies of scope is an economic theory stating that average total cost (ATC) of production decrease as a result of increasing the number of different goods produced. [2] For example, a gas station primarily sells gasoline, but can sell soda, milk, baked goods, etc. and thus achieve economies of scope since with the same facility, each new ...
A report from the National Bureau of Economic Research, led by health economist Amy Finkelstein, found mortality rates among Americans dropped 0.5% for every 1% jump in an area’s unemployment ...
In finance and economics, systematic risk (in economics often called aggregate risk or undiversifiable risk) is vulnerability to events which affect aggregate outcomes such as broad market returns, total economy-wide resource holdings, or aggregate income. In many contexts, events like earthquakes, epidemics and major weather catastrophes pose ...
Non-incremental diversification is a strategy followed by conglomerates, where the individual business lines have little to do with one another, yet the company is attaining diversification from exogenous risk factors to stabilize and provide opportunity for active management of diverse resources.
Concentric diversification: Introducing a similar product within the existing product line with the purpose of leveraging existing expertise to expand the product range. Horizontal diversification: Introducing an unrelated new product alongside existing offerings with the objective of reaching new customer segments and reducing dependence on a ...