The question is on everyone’s lips: five holdings, ten, thirty? This article does not give a number — there is none that works for everyone. It shows what the number does, mechanically, building on diversification, mechanically and on company-specific risk and market risk: the first article says correlation decides everything; the second, that a security carries two risks. The number acts on only one of them.
What each added holding removes — less and less
Each security carries a risk of its own, which does not coincide with the others’ when they are loosely correlated. Spreading the same money over several securities lets these own moves partly offset each other: the portfolio’s own part shrinks. But it shrinks fast at first, then less and less. Going from one holding to four does a lot; going from forty to forty-four is barely visible. The first holdings do most of the work; the next ones refine it.
What no number removes
Market risk is shared by every security: it does not offset, whatever their number. A hundred well-spread securities still carry, in full, the risk that the market falls. That is the floor under the curve: diversification leads to it, it does not go through it. An index ETF holding hundreds of securities does not have “zero risk” — it has, roughly, the market’s risk and little else.