Systematic risk refers to the inherent uncertainty facing all investments within a financial market due to broad economic, political, or geopolitical events. It encompasses the risk associated with market-wide phenomena that cannot be mitigated through diversification. Examples include fluctuations in interest rates, inflation, recessions, or major political changes, which are likely to affect all securities to some degree. Unlike idiosyncratic risk, or "unsystematic risk" which is specific to an individual company or indstury, systematic risk is tied to the collective performance of the market as a whole.
Systematic risk is the market-wide uncertainty that affects all investments and cannot be lessened by diversification.
Written by JesseUpdated over a week ago