Rebalancing is the automatic process that occurs every day at 2:00 AM (UTC) to adjust the composition of your basket to the initially chosen proportion.
Example: If your basket consists of 50% SOL and 50% XRP, and Solana doubles in value while XRP remains the same, the total value of your basket increases, but your distribution will no longer be 50%-50%. During the rebalancing, part of the SOL will be sold and XRP will be bought to return to the original proportion without changing the total value of the investment (beyond price fluctuations).
Rebalancing advantage:
It keeps your investment strategy exactly as you designed it automatically, similar to what happens with stock indexes.