A diversified carry basket mixes a 'lil risk with a 'lil safety on foreign exchange markets.
First, it helps to know what a "carry trade" is, which basically means you take out a loan with a low interest rate, then use that money to invest in something more profitable, so you can pay off the loan and make a tidy profit on the difference.
Carry trades also refer more specifically to currency carry trades, where investors try to make money off the difference between moving exchange rates between different currencies. To make carry trades doable and worth it, you have to be starting with a lot of money up front.
A diversified carry basket is a carry trade strategy: the investor will order multiple carry trades across foreign exchange markets at the same time. The diversification of the trades across various currencies reduces the investor's risk, just as with regular investment portfolio diversification.
To make sure they're being smart about it, investors will spend time researching which currencies to invest in and trade with, in order to try to get profits from buying low and selling high. If they guess wrong, they could end up owing money. Maybe a lot of money. Yikes.
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Finance: What are Diversified v. Non-Div...2 Views
Finance a la shmoop what are diversified versus non diversified funds?
all right diversified a few eggs each in lots of baskets non-diversified all your [Baskets of eggs appear]
eggs in one basket diversified a mutual fund with 128 different growth equities
in it like Coke, Disney, JPMorgan and Tesla non-diversified Mark Zuckerberg [Diversified and non-diversified company's appear]
portfolio diversified a portfolio with stocks bonds real estate commodities and
fancy artwork from some talented dead people non diversified when your entire [Undiversified portfolio appears]
holdings comprise this.. when you invest in a diversified fund you spread your
money around ie stick your fingers in a whole bunch of different pies so that if [Woman puts finger into pie]
one pie turns out to be well poisoned it won't mean financial death at least not
unless you're a thumbsucker [Baby sucking thumb]
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