What does diversifiable mean?
Diversifiable is an adjective meaning capable of being diversified — that is, able to be spread out, varied, or distributed across different categories. In modern usage it belongs overwhelmingly to finance and economics, where it forms part of the standard term 'diversifiable risk'. This denotes the portion of an investment's risk that stems from factors specific to a particular company or industry and can therefore be reduced, or eliminated entirely, by holding a sufficiently broad mix of assets. Its counterpart, undiversifiable or systematic risk, arises from market-wide forces such as interest-rate changes and cannot be avoided by spreading investments. Outside financial writing the word appears occasionally in general contexts to describe anything whose components can be varied, though such use is uncommon. Formal and technical in register, diversifiable carries no emotional connotation but signals analytical precision.
adjectiveCapable of being diversified or varied, especially referring to risk that can be reduced or eliminated through diversification of a portfolio or set of holdings.
- (of risk) capable of being reduced or eliminated through diversification of holdings
- capable of being diversified or made more varied in general
"Because the two industries respond differently to economic cycles, the risk they carry is largely diversifiable."
"Unsystematic, company-specific losses are largely diversifiable across a broad portfolio."
"The curriculum's content was judged diversifiable enough to accommodate regional variation."
In finance, diversifiable risk is the only kind of risk you can actually get rid of — the rest simply comes with the territory of investing.
Reviewed by Deb Chak, Editor. AI-assisted content curated by RJS Tech Solutions LLP.
Etymology of diversifiable
Diversifiable derives from the verb 'diversify', which entered English in the late Middle Ages from Old French 'diversifier', itself from Medieval Latin 'diversificare', built on Latin 'diversus', meaning 'turned different ways' — the past participle of 'divertere', to turn aside. The adjective formed with the '-able' suffix, indicating capability. Cognates include 'diverse' and 'diversion', all tracing back to the same Latin root about turning or pointing in different directions.
Related word forms
How diversifiable is actually used
Primarily a technical term in finance and portfolio theory; outside that context it is rare and somewhat formal. It typically appears attributively before the noun 'risk' or 'component'.
Easily confused with diversifiable
'Diverse' means varied in composition, while 'diversifiable' describes something that has the capacity to be made varied or spread out.