Uncorrelated Industries/Sectors

In addition to the diversification benefits of having multiple stocks in a portfolio, diversifying across uncorrelated industries and sectors is an important aspect of portfolio management.
Uncorrelated Industries/Sectors
Kirk Du Plessis
Apr 19, 2021

It's no secret that diversification is an important part of being successful trading in the stock market. But when it comes to trading options, it's important not only to diversify your positions among different stocks, but to diversify them among uncorrelated assets. An example of uncorrelated asset classes would be social media and oil stocks. When social media stocks go down it should conceivably have very little impact on what oil stocks do in the future. Therefore, the positions in both sectors offer true diversification.

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