portfolio effect

portfolio effect definition - business

portfolio effect

A reduction in the variation of returns on a combination of assets compared with the average of the variations of the individual assets. This effect measures the extent to which variations in returns on a portion of assets held are partially canceled by variations in returns on other assets held in the same portfolio.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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