Systematic Risk

A type of portfolio that is well diversified across a wide variety of areas, typically with a significant number of holdings. Because these portfolios contain a large number of positions ...

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", ...

A model that describes the relationship between risk and expected return and that is used in the pricing of risky securities. The general idea behind CAPM is that investors need to be ...

The tendency for investors to invest in a large amount of domestic equities, despite the purported benefits of diversifying into foreign equities. This bias is believed to have arisen as ...

A type of political risk in which political actions in a host country can adversely affect all foreign operations. Macro risk can come about from events that may or may not be in the ...

The asymmetric volatility phenomenon (sometimes known as AVP) is a market dynamic that shows that there are higher market volatility levels in market downswings than in market upswings. ...

An economic idea that suggests that it is impossible to create or observe a truly diversified market portfolio (one of the key variables of the capital asset pricing model (CAPM)). ...

If you think holding a few different stocks is enough, you may be in for an unpleasant surprise.

CAPM helps you determine what return you deserve for putting your money at risk.

The consumption capital asset pricing model smoothes over some of CAPM's weaknesses to make sense of risk aversion.

Many investors do not understand how to determine the level of risk their individual portfolios should bear.

Reduce your stock portfolio's risk by trading with foreign currencies.

Without this risk-reduction technique, your chance of loss will be unnecessarily high.

If you diversify too much, you might not lose much, but you won't gain much either.