Meaning of diversifiable risk | Babel Free

Definitions

An investment risk that can be mitigated by diversification of an asset portfolio.

countable, uncountable

Examples

“The Comments certainly contemplate that, with respect to uncompensated, diversifiable risk, fiduciaries act with that objective in mind: “[M]ore than conservatism or a duty of caution,” the duty to diversify is a “warning” that a “central feature” of the prudence of risk-taking “ordinarily is the reduction of uncompensated risk through diversification.””

“Diversifiable risk is an asset's risk that is related to a particular business event, such as a strike, and which can be overcome by diversification.”

“The risk of an investment consists of two components: diversifiable and non-diversifiable risk. Diversifiable risk, sometimes called unsystematic risk, results from uncontrollable or random events that are company-specific, such as labour strikes, lawsuits and regulatory actions.”

CEFR level