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    Brijrajsinh Gohil
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    Systematic risk refers to risks that affect the overall market and cannot be reduced through diversification. These include interest rates, recessions, and wars. Unsystematic risk is specific to individual companies or industries and can be reduced through a diversified portfolio. Both systematic and unsystematic risks contribute to overall investment risk, though systematic risk is unavoidable through diversification alone.

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    Systematic risk refers to risks that affect the overall market and cannot be reduced through diversification. These include interest rates, recessions, and wars. Unsystematic risk is specific to individual companies or industries and can be reduced through a diversified portfolio. Both systematic and unsystematic risks contribute to overall investment risk, though systematic risk is unavoidable through diversification alone.

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    11 views1 page

    Risk

    Uploaded by

    Brijrajsinh Gohil
    Systematic risk refers to risks that affect the overall market and cannot be reduced through diversification. These include interest rates, recessions, and wars. Unsystematic risk is specific to individual companies or industries and can be reduced through a diversified portfolio. Both systematic and unsystematic risks contribute to overall investment risk, though systematic risk is unavoidable through diversification alone.

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    Attribution Non-Commercial (BY-NC)
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    What Does Systematic Risk Mean? The risk inherent to the entire market or entire market segment.

    Also known as "un-diversifiable risk" or "market risk."

    Investopedia explains Systematic Risk Interest rates, recession and wars all represent sources of systematic risk because they affect the entire market and cannot be avoided through diversification. Whereas this type of risk affects a broad range of securities, unsystematic risk affects a very specific group of securities or an individual security. Systematic risk can be mitigated only by being hedged. Even a portfolio of well-diversified assets cannot escape all risk.

    Read more: http://www.investopedia.com/terms/s/systematicrisk.asp#ixzz1flI4jgSc

    What Does Unsystematic Risk Mean? Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through appropriate diversification. Also known as "specific risk", "diversifiable risk" or "residual risk".

    Investopedia explains Unsystematic Risk For example, news that is specific to a small number of stocks, such as a sudden strike by the employees of a company you have shares in, is considered to be unsystematic risk.

    Read more: http://www.investopedia.com/terms/u/unsystematicrisk.asp#ixzz1flIRCE14

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