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Topic
Diversification
6 guides in Finabase Learn
- Asset allocation How a portfolio is divided among asset classes such as stocks, bonds and cash; the main driver of a portfolio's risk.
- Correlation between asset classes: how it works and why it shifts How to calculate a correlation by hand, what 12 years of monthly returns show across eight asset classes, and why the stock-bond correlation flipped in 2022.
- Correlation coefficient (CORREL): how two series move together What Pearson correlation measures, a hand calculation on Treasury bond ETF prices, market correlation versus Finabase’s 5-bar CORREL study, and their pitfalls.
- Diversification: why spreading your investments reduces risk How diversification works through correlation, the difference between risk you can diversify away and market risk you can’t, with worked math and real correlations.
- Emerging markets Economies in transition to developed status, such as India and Brazil, offering higher growth with higher political and currency risk.
- Market concentration: what mega caps mean for S&P 500 investors How much of the S&P 500 its ten largest companies now make up, why cap-weighted indexes concentrate, and what it means for an index fund’s risk and diversification.
Educational content, not investment advice. Finabase Learn explains how markets and tools work. It does not recommend any security or strategy, and examples are for illustration only. Investing involves risk, including the loss of principal. Rules and figures are for the United States unless stated and can change — check the cited source before you act.