Systematic risk principle

Only the systematic portion of risk matters in large, well-diversified portfolios. Thus, expected returns must be related only to systematic risks.

Systematic Risk Principle

A theory stating that unsystemic risks are irrelevant in properly diversified portfolios. According to this principle, only systemic risks affect the expected return on such a portfolio, because the process of diversification eliminates the risk attached to any particular company, and only the systemic risks endemic to the wider economy may affect the portfolio.

单词	systematic risk principle
释义	Systematic risk principle Systematic risk principle Only the systematic portion of risk matters in large, well-diversified portfolios. Thus, expected returns must be related only to systematic risks. Systematic Risk Principle A theory stating that unsystemic risks are irrelevant in properly diversified portfolios. According to this principle, only systemic risks affect the expected return on such a portfolio, because the process of diversification eliminates the risk attached to any particular company, and only the systemic risks endemic to the wider economy may affect the portfolio.
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