A Study on Portfolio Diversification and Risk–Return Analysis of Selected Financial Assets in India

Abstract

The present study focuses on portfolio diversification and the risk–return performance of selected financial assets in India. The study aims to understand how different investment options such as stocks, mutual funds, Gold ETF, and bonds perform under varying market conditions. Diversification is considered an important investment strategy that helps investors reduce overall portfolio risk by allocating investments across different asset categories. The research is descriptive and analytical in nature and is completely based on secondary data. Monthly historical data for the period from 2021 to 2025 were collected from financial websites, investment platforms, and published financial reports. The collected data were analyzed using tools such as return calculation, average return, standard deviation, comparative analysis, and graphical representation. The study compares the performance and volatility of selected assets to identify the relationship between risk and return. The analysis shows that equity investments generally provide higher returns with greater fluctuations, while bonds and Gold ETF offer more stable performance with lower risk. Mutual funds provide balanced investment opportunities through diversification benefits. The study highlights the importance of diversification in investment decision-making and concludes that a properly diversified portfolio can help investors manage risk while improving long-term financial stability.