Systematic Risk
InvestingGlossary term
Definition
Market-wide risk that affects all investments and cannot be eliminated through diversification. Examples include interest rate changes, recessions, inflation, and geopolitical events. Also known as market risk or non-diversifiable risk.
Related terms
- Unsystematic RiskRisk specific to an individual company or industry that can be reduced or eliminated through diversification. Examples include management changes, product recalls, or lawsuits. Also known as company-specific risk or diversifiable risk.
- BetaA measure of a stock's volatility relative to the overall market. A beta of 1 means the stock moves with the market, above 1 means more volatile, below 1 means less volatile.
- DiversificationA risk management strategy that mixes different types of investments within a portfolio. The goal is to reduce exposure to any single asset or risk.
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