Non-Systematic Risk

Non-Systematic Risk is risk that is unique to a certain asset or company. An example of non-systematic risk is the possibility of poor earnings or a strike among a company's employees.

Non-Systematic Risk

Non-Systematic Risk is risk that is unique to a certain asset or company. An example of non-systematic risk is the possibility of poor earnings or a strike among a company's employees.

 


Application of Non-Systematic Risk

Non-systematic risk may be mitigated by buying different of securities in different industries and/or sectors. For example, a particular oil company has the diversified risk that it may drill little or no oil in a given year. An investor may mitigate this risk by investing in in companies having nothing to do with oil. Non-systematic risk is also called diversifiable risk.



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