Systematic Risk
Definition of 'Systematic Risk'The risk inherent to the entire market or entire market segment.Also known as "un-diversifiable risk" or "market risk." |
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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. |
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