The process of varying or expanding into different areas, products, or investments to reduce risk or increase opportunities. It's a strategy used in business, finance, and biology to create variety and resilience.
From Latin 'diversus' (different, various) + 'facere' (to make) + the suffix '-ation' (process or result). The term developed in the 18th century, with modern business and investment applications emerging in the 20th century as portfolio theory advanced.
Diversification embodies the wisdom of 'don't put all your eggs in one basket' but with scientific backing from modern portfolio theory, which mathematically proved that diversified investments can reduce risk without sacrificing returns. Nature also employs diversification strategies, with ecosystems being more stable when they contain diverse species rather than monocultures.
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