DEFINITION of 'Downside'

The negative movement in the price of a security, sector or market. Downside can also refer to economic conditions and it describes periods when an economy has either stopped growing or is shrinking. Movement to the downside is often expressed in terms of risk, as in there is a downside risk in a particular country's economy; or, stock ABC has downside risk because of changing consumer trends. Downside risk can be evaluated by fundamental and technical factors.

BREAKING DOWN 'Downside'

Downside risk is sometimes expressed in terms of an estimation of a security or economy's potential to experience negative movement. A stock analyst, for example, might guess how big a price drop he or she expects stock ABC will endure because of certain events. Economists can estimate the downside risk a country's economy is likely to suffer due to current conditions, such as unemployment and GDP growth.

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