UNSYSTEMATIC RISK

unsystematic risk: translation

The risk of price change for an individual stock, commodity, or industry. Anything from an oil discovery to a change in management could affect this sort of risk. Unsystematic risks are reduced or eliminated through diversification of holdings, not by hedging with index futures. Compare with systematic risk. The CENTER ONLINE Futures Glossary

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Also called the diversifiable risk or residual risk. The risk that is unique to a company such as a strike, the outcome of unfavorable litigation, or a natural catastrophe that can be eliminated through diversification.Related: systematic risk. Bloomberg Financial Dictionary

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unsystematic risk unsystematic risk ➔ risk¹

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unsystematic risk UK US noun [C or U] (also specific risk)

► FINANCE, STOCK MARKET the risk involved in buying a particular investment, rather than the risk that affects any investment: »You can reduce unsystematic risk associated with individual stocks, but there are inherent market risks that affect nearly every stock.

► ECONOMICS a risk that affects only one company or industry: »The risk of a decline in house prices is likely to be an unsystematic risk, specific to the housing market.

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UNSYSTEMATIC RISK

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