Nonsystematic Risk: Nonsystematic risk results from unpredictable factors, such as poor management decisions, successful competitive products, or suddenly obsolete technologies that may affect the securities issued by a particular company or group of similar companies. Portfolio diversification, which means spreading your investment among a number of asset subclasses and individual issuers within those subclasses, can help to counter nonsystematic risk.

 

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Nonsystematic Risk: Nonsystematic risk results from unpredictable factors, such as poor management decisions, successful competitive products, or suddenly obsolete technologies that may affect the securities is . . . View Full Definition

Systematic Risk: Systematic risk, also called market risk, is risk that’s characteristic of an entire market, a specific asset class, or a portfolio invested in that asset class. It’s the opposite of the ris . . . View Full Definition

Risk Premium: A risk premium is one way to measure the risk you'd take in buying a specific investment. Some analysts define risk premium as the difference between the current risk-free return — defined a . . . View Full Definition

Risk Premium Approach: A common approach for tactical asset allocation to determine the relative valuation of asset classes based on expected returns.