You can now review how well you diversify your portfolio using Diversification Radar Chart!
You can view it through the Public Portfolio page (you can open from Ranking), or from the Performance tab on your own portfolio.
There are 4 types of diversification that the Diversification Radar Chart demonstrates: industry diversification, geography diversification, position diversification, and asset allocation.
What does diversification mean?
Intuitively, diversification means that you don't put all your eggs in the same basket. Diversification is a great way to reduce risk (or volatility) which is in general desirable for your portfolio, especially if you can keep the same return.
How do you read the Diversification Radar Chart? What does the score mean?
In terms of diversification, this portfolio does a really good job - it has a score of 95/100.
This is because this portfolio is considered well-diversified in terms of industry, geography, position, and asset allocation.
For each of these dimensions, the green shape within the circle almost touches the circumference of the circle, meaning each of the sub-scores are really high. As a result, there's a nice big green shape within the circle!
What is good diversification look like?
For industry diversification, this portfolio is well-diversified among different industries.
You don't have to put your portfolio in as many as 9 industries like this one. However, if you don't have a specific strategy in mind, it is a good idea to diversify your portfolio among a few industries.
In general, similar idea applies to other dimensions.
If you have the height of these bars spread out, where no bars kinda stand out, then you are not putting all your eggs in the same basket - that you're diversifying!