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Portfolio risk definition

Few people truly understand the complexities of portfolio risk.


Portfolio risk is the general term for riskiness or dispersion of returns on a portfolio of assets. There are several different ways risk can be measured and interpreted. It can be measured using the stream of values of a portfolio, like the NAV on a mutual fund, or from a bottom-up calculation using individual positions and weights. The latter requires covariance calculations between all combinations of stocks. Portfolio risk can also be compared to other portfolios, or benchmarks, on a relative basis.

Synonym: portfolio variability

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Portfolio risk is normally depicted on the x-axis in a risk-return scatterplot. | True or False?


In a Sentence

Pat:  As your CEO, I encourage every employee to learn the calculations of portfolio risk .
Eve:  Yes, I concur. It's the best way to reduce career risk.


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~/ home  / finance  / glossary  / portfolio risk

portfolio risk
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portfolio standard deviation
Modern Portfolio Theory
covariance matrix
relative risk
absolute risk