As the idiom goes, "Don't put all your eggs in one basket". It is common knowledge that diversification is very important when it comes to investing.However, the questions are: How to diversify? How diversified are you? How do you measure diversification? Google "How to diversify" and there are countless articles out there "teaching" people how to diversify. In my opinion, many articles are either too vague or too qualitative. I come from an engineering background hence I prefer to quantify things. I prefer concrete numbers. First, let us take a step back. Why do we need to diversify? It is because we want to reduce the risk of investing. There are fundamentally two types of risk in investing: systematic and unsystematic. Systematic risk is the risk that affects the entire stock market. Unsystematic risk is the risk that is specific to a company or industry. Therefore, in order to ......