True Diversification®
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Simple Explanation
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True Diversification® is a registered trademark of Gravity Investments, LLC.
To achieve True Diversification® is to arrive at the proper mix of a given set of
assets in a portfolio resulting in the highest or most optimal level of diversification
possible.
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Any portfolio can be measured using True Diversification®. Scoring True Diversification®
has 3 primary benefits; 1) it allows for fast and accurate comparisons between portfolios,
2) it enables one to test the diversification effect of adding or deleting assets
or varying their allocations in a portfolio, and 3) it gives one the ability to
measure the impact that different time periods or market cycles have on the diversification
of a portfolio. Measuring diversification using the patented True Diversification®
score enables one to measure, manage and improve diversification.
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Advanced Explanation
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True Diversification® describes the result when one achieves the proper, optimal, or
maximum level of diversification for a given portfolio of assets. For True Diversification®
to be achieved, one must consider Systematic-Diversification, Non-Systematic Diversification,
and Total Diversification of the portfolio. True Diversification® utilizes a holistic
portfolio approach whereby a given set of assets are considered.
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Gravity Investments determines the time periods, observation frequencies and any other data
conditioning used to generate the correlations on MyDiversification.com. When combined with
the user’s assets and their corresponding weightings, this information serves as inputs to the
True Diversification® measurement.
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