Tuesday, August 2, 2011

What are the differences between systematic and unsystematic risk?

What are the differences between systematic and unsystematic risk?

There are differences between the systematic and unsystematic risk though they are risk. Here are some of the differences presented : -

Systematic Risk
Unsystematic Risk
This type of risk affects over all securities in a market.
This type of risk is unique to a security or a company.
This risk is dependent of political or economic factors.
This risk is independent of political or economic factors.
It is also known as Market Risk.
It is also known as Diversifiable Risk.
This risk arises from management inefficiency, unsuccessful planning etc.
It occurs due to imbalance in the political situation or fluctuation in the market etc.
It can be reduced by holding large number of securities.
It can be reduced by holding better portfolios of company’s securities.

Source: Here.

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