Systematic vs Unsystematic
- Systematic risk is the risk of the entire market declining. It is unpredictable and impossible to completely avoid. It’s also known as undiversifiable risk, volatility risk, or market risk. It’s the result of macroeconomic events that affect the market as a whole and cannot be controlled, at least by an investor.
- Unsystematic or diversifiable risk is the uncertainty associated with an individual stock or industry. It is the risk related to a company or sector and can be mitigated through diversification.