# diversification

/daɪˌvɝsəfəˈkeɪʃən/ (US) · /daɪvˌɜːsɪfɪkˈeɪʃən/ (UK)

Source: https://englishreference.com/word/diversification
Updated: 2026-08-27

## Senses

### 1. general variety

noun · CEFR C1 · Academic

the act of adding different types of things to a group to create more variety.

For teachers: the process of becoming more varied or diverse in form or character.

- The diversification of the local economy helped the city survive when the main factory closed.
- Ecological diversification within the rainforest allows thousands of species to coexist by occupying distinct niches within the same environment.

### 2. investment strategy

noun · CEFR C1 · Technical

putting your money into many different types of investments so you do not lose everything if one fails.

For teachers: a risk management technique that mixes a wide variety of investments within a portfolio to minimize the impact of any single asset's performance.

- Financial advisors recommend diversification so that your savings are safe even if the stock market drops.
- The fund manager insisted on geographic diversification, arguing that exposure to emerging markets would hedge against a downturn in domestic equities.

Usage: Often used with the preposition 'of' (diversification of assets) or 'into' (diversification into bonds).

### 3. business expansion

noun · CEFR C1 · Technical

when a company starts making new products or enters new markets to grow its business.

For teachers: a corporate strategy of entering new markets or industries that are distinct from a company's core business operations.

- The farm's diversification into tourism helped them earn money during the winter months.
- The tech giant's diversification into healthcare services represented a significant shift from its traditional focus on consumer hardware.

## Examples

- Diversification is a key strategy for any long-term investor.
- The company's diversification into renewable energy helped it survive the sudden crash in oil prices.
- While geographic diversification can protect a portfolio against regional downturns, it may also introduce currency risks that require sophisticated hedging strategies to manage effectively.

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