What is 'Systematic Risk'?

Systematic risk, also known as market risk, is risk inherent to the entire market or market segment. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Term of the Day | Words to Know Systematic Risk Systematic risk is the risk inherent to the entire market or market segment. Systematic risk, also known as "undiversifiable risk," "volatility" or "market risk," affects the overall market, not just a particular stock or industry. This type of risk is both unpredictable and impossible to completely avoid. It cannot be mitigated through diversification, only through hedging or by using the correct asset allocation strategy. Read More » Related to "Systematic Risk" Systemic vs. Systematic Risk: What's the Difference? Systemic risk generally refers to an event that can trigger a collapse in a certain industry or economy, whereas systematic risk refers to overall market risk. Read More » Common Methods of Measurement for Investment Risk Management Learn about common measures used in risk management and how to use risk management techniques to assess the risk associated with an investment. Read More » The Importance Of Diversification Diversification is a technique that reduces risk by allocating investments among various financial instruments. Learn how to maximize your return without increasing substantial risk in your portfolio. Read More » SPONSORED BY SMARTASSET Financial Advisor Mistakes to Avoid Choosing a financial advisor is a major decision that can determine your financial trajectory for years to come. SmartAsset offers tips on common mistakes to avoid. Learn More » Related Definitions Asset Allocation Asset allocation is the process of deciding where to put money to work in the market. Read More » Leverage Leverage results from using borrowed capital as a source of funding when investing to expand a firm's asset base and generate returns on risk capital. Read More » Unsystematic Risk Unsystematic risk is unique to a specific company or industry and can be reduced through diversification. Read More » Diversification Diversification is an investment approach, specifically a risk management strategy. Following this theory, a portfolio containing a variety of assets poses less risk and ultimately yields higher returns than one holding just a few. Read More » CONNECT WITH INVESTOPEDIA Email sent to: mondemand.forex@blogger.com To update your newsletter preferences or unsubscribe, click here. 114 West 41st St, floor 8 New York NY 10036 © 2020, Investopedia, LLC, All Rights Reserved | Privacy Policy