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Systematic Risk vs Unsystematic Risk | Top Differences You Must Know! [Video]

Systematic Risk vs Unsystematic Risk | Top Differences You Must Know!

In this video on Systematic Risk vs Unsystematic Risk, here we discuss key differences between Systematic and Unsystematic Risk along with infographics and comparison table.

𝐖𝐡𝐚𝐭 𝐢𝐬 𝐒𝐲𝐬𝐭𝐞𝐦𝐚𝐭𝐢𝐜 𝐑𝐢𝐬𝐤?
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Systematic risk has no specific definition but is the inherent risk that exists in the stock market.

𝐖𝐡𝐚𝐭 𝐢𝐬 𝐔𝐧𝐬𝐲𝐬𝐭𝐞𝐦𝐚𝐭𝐢𝐜 𝐑𝐢𝐬𝐤?
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Unsystematic risk is an industry or a company-specific threat for every type of investment. It is also known as “Specific Risk” or “Residual Risk.”

𝐒𝐲𝐬𝐭𝐞𝐦𝐚𝐭𝐢𝐜 𝐑𝐢𝐬𝐤 𝐯𝐬 𝐔𝐧𝐬𝐲𝐬𝐭𝐞𝐦𝐚𝐭𝐢𝐜 𝐑𝐢𝐬𝐤 𝐊𝐞𝐲 𝐃𝐢𝐟𝐟𝐞𝐫𝐞𝐧𝐜𝐞𝐬
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#1 – Systematic risk is uncontrollable in nature since it includes large-scale and numerous factors. Whereas, unsystematic risk is controllable as it is limited to a specific section.

#2 – Systematic risk is broken down into 3 categories i.e. Interest rate risk, buying power risk and market risk. Whereas, Unsystematic Risk is divided into two main categories, business risk and financial risk.

#3 – Systematic risk can be controlled substantially by techniques such as hedging and allocation of assets. Whereas, diversification of a portfolio can eliminate unsystematic risk.

To know more about the 𝐒𝐲𝐬𝐭𝐞𝐦𝐚𝐭𝐢𝐜 𝐑𝐢𝐬𝐤 𝐯𝐬 𝐔𝐧𝐬𝐲𝐬𝐭𝐞𝐦𝐚𝐭𝐢𝐜 𝐑𝐢𝐬𝐤, you can go to this 𝐥𝐢𝐧𝐤 𝐡𝐞𝐫𝐞:- https://www.wallstreetmojo.com/systematic-risk-vs-unsystematic-risk/

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