noun

diversification

/daɪˌvɜːrsɪfɪˈkeɪʃən/ · say it: dy·vur·suh·fuh·KAY·shun

spreading investments to reduce risk

In more detail

1. (noun) the process of adding variety to something by introducing different types or products

2. (noun) the action of spreading risk by investing money in different types of businesses or investments instead of putting it all in one place

Examples

1. The company pursued diversification by expanding into new markets and product lines.
2. Diversification of your investment portfolio helps protect against financial losses.

How to use diversification

Diversification is commonly used in business and finance contexts to describe the deliberate expansion into different areas to reduce risk or increase revenue. In business strategy, it refers to broadening the range of products or services; in investment, it means spreading capital across different assets to minimize financial risk. The term carries a positive connotation of prudent management.

Common phrases

product diversification
diversification strategy
geographic diversification
portfolio diversification
diversify into new markets
diversification of investments

Synonyms

variety · variation · broadening · expansion · spread

Opposites

concentration · specialization

Word family

diversify (verb) · diversified (adjective) · diverse (adjective) · diversity (noun)

A common mistake

Learners sometimes confuse diversification with simply having variety; note that diversification implies a strategic, intentional process of adding different types rather than just having existing differences.

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