Systematic risk

Systematic risk is an important concept in the Capital Asset Pricing Model.

Systematic risk means the element of total risk which cannot be eliminated by holding a diversified portfolio of investments.

Under the CAPM, only systematic risk is rewarded with additional returns.

Systematic risk is often quantified by Beta.

Systematic risk is also known as 'market risk' or 'non-diversifiable risk'.

See also

• Beta
• Capital asset pricing model
• Market risk
• Non-diversifiable risk
• Systemic risk
• Unsystematic risk