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Glossary
Returns & risk

Systematic risk

The risk of the whole market, which no amount of diversification removes.

Recessions, wars, interest rate shocks, pandemics. These hit everything at once. Because you cannot escape it by owning more stocks, it is the only risk the market compensates you for taking.

Its opposite, specific risk, is the risk that this particular company fails. You are not paid for carrying that, because you could have diversified it away for nothing.

Figure

The market moves first, and recovers first

"recession declared"Share pricesThe economy

Shares fall before the data does and start climbing while the news is still uniformly awful. Waiting for the news to improve means buying after the recovery has happened.

Why it matters

It is the floor under your portfolio's risk, and the source of your long-run return.

The mistake everyone makes

Believing that owning enough stocks makes you safe. It makes you safe from the wrong thing.

Related terms

Diversification
Owning things that do not move together, so that no single failure ruins you.
Correlation
The degree to which two things move together, from −1 to +1.
Beta
How much a stock moves relative to the market as a whole.

See Systematic risk on a real company

SteadyShares pulls this straight from the filings for 1,100+ companies, alongside moat scores, DCF fair value and peer comparison. Free to look around.

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