Portfolio risk is the risk of several assets when held in combination. The process of combining assets in such a way so that risk will be reduced is called diversification. However, portfolio risk is the risk that remains after the diversifiable risk has been eliminated through diversification.
Unsystematic risk is risk that affects only one company or one industry and that is separate from economic or political factors that affect all securities systematically. Unsystematic risk can be eliminated in a portfolio through proper diversification.
Market risk, or systematic risk, is the risk that changes in a security's price will result from changes that affect all firms. Market risk, or systematic risk, cannot be eliminated by diversification in a portfolio . Investors will always be exposed to the uncertainties of the market, no matter how many stocks they hold.
Systematic risk, or market risk, is the risk that changes in a security's price will result from changes that affect all firms. Systematic risk, or market risk, cannot be eliminated by diversification in a portfolio . Investors will always be exposed to the uncertainties of the market, no matter how many stocks they hold.
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