By distributing your investments among several asset classes, you can lower the overall risk of your portfolio because each asset class has a distinct risk-return profile. Also, it is imperative to enhance divapk downloadersification within each asset class by allocating investments across various sectors and industries in order to mitigate sector-specific risk. Investing in various geographical areas is an additional method of portfolio diversification. You can lower the risk of your portfolio being impacted by the political or economic events of any one country even more by investing in international stocks and emerging markets.