Market risk
Also called: systematic risk, company-specific risk, unsystematic risk, idiosyncratic risk
The risk that affects almost all shares at once, such as a recession or financial crisis, which diversification among shares cannot remove.
Company-specific risk comes from events affecting one company and falls as more independent holdings are added. Market risk remains however many shares are held; beta measures a share's exposure to it, and mixing in other asset classes can reduce it further.
Learn more in these lessons
- DiversificationHow does diversification reduce risk, and what can't it protect against?
- Beta and market riskWhat does a share's beta tell you about its risk?
Related terms
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