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Macro Level Risks in an Investment Portfolio

Systematic and Unsystematic Risks

Systematic Risk:  The risk within a system, in which a particular asset is associated and over which it has no control, and therefore cannot be diversified away

"When the tide goes out, all the boats go down."

Examples of Systematic Risk:

Unsystematic Risk: The unique risk associated with owning a particular security.  This risk can be mitigated through diversification. 

Types of Unsystematic risks include:

Total Risk = Systematic Risk + Unsytematic Risk