Investing means taking a certain amount of risk in order to achieve your financial goals. There are distinct categories and types of risk investors contend with, including systematic and unsystematic ...

Here at Investopedia, we emphasize the importance of prudent investing—put at stake only what you can afford to lose and ensure your choices align with your financial goals and risk tolerance. This ...

Investing is a balancing act between risk and reward, where the aim is to take on types of risks that offer proportional returns. In this game, not all risks are created equal — some come with the ...

Investing is all about striking the right balance between risk and return. There are different types of risks in the stock market and there are ways to mitigate them. All investors naturally want to ...

Here's what you need to know about the different types of risk you take as an investor. You may have heard that the more risk you're willing to take on, the greater potential you have to earn high ...

The Treynor ratio is a tool in portfolio analysis that helps investors assess how well a portfolio compensates them for taking on market risk, also known as systematic risk. This portfolio ratio shows ...

Entrepreneurs understand owning and operating a business involves accepting a level of risk: risk that your business may not succeed, risk that you may not recover your investment. The amount of risk ...

The Treynor ratio and the Sharpe ratio are financial metrics that use different approaches to evaluate the risk-adjusted returns of an investment portfolio. The Treynor ratio employs beta and measures ...

There are a lot of myths about diversification. Today, I want to address a pernicious lie floating around out there that diversification only works when times are good. In the past, we’ve looked at ...

Idiosyncratic risk refers to risks that are unique to an individual asset such as a company’s stock or a group of assets such as the stocks of a particular industry. Idiosyncratic risks are important ...