Unsystematic Risk

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.

Filed Under: Financial Theory

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