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Stock risk definition

A comfort level here requires an understanding of Statistics; including, single- and multi-variable linear regression.

Intermediate

Stock risk is a general term for the variability of returns. The two most common absolute measures are variance and standard deviaton. Stock risk can also be measured relative to other stocks with measures such as covariance and correlation. For risk forecasting and performance attribution applications stock risk is decomposed into specific risk and systematic risk.

Synonym: stock variability


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Quiz

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Each individual stock has a variance and standard deviation, while each pair has a covariance and correlation coefficient. | True or False?

True

In a Sentence

Bev:  I'm amazed that four stock risk  measures all start with demeaned returns.
Ann:  Yes, it's a powerful concept hidden behind a bad name.

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Keywords:
stock risk
variability
variance
standard deviation
co-movement
covariance
correlation
risk modeling
specific risk
systematic risk
volatility