Diversification Statistics

Always wanted to know the statistic behind diversification and found this information in Joel Greenblatt's book, You Can Be a Stock Market Genius. He provides the following statistics by owning the following number of stocks:

2 stocks eliminates 46% of non-market risk of just owning one stock
4 stocks eliminates 72% of the risk
8 stocks eliminates 81% of the risk
16 stocks eliminates 93% of the risk
32 stocks eliminates 96% of the risk
500 stocks eliminates 99% of the risk

Now to do the mathematical calculatons to confirm his statistics.

Have a blessed day.

For a man's ways are in full view of the Lord, and he examines all his paths - Prov 5:21


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Diversification