A portfolio of stocks fluctuates when the treasury yields change. since this risk cannot be eliminated through diversification, it is called systematic risk. Unsystematic risk, which has an influence on a particular industry or security, is distinct from this sort of risk.
It is usually believed that systematic risk is challenging to prevent because it is primarily unpredictable. Building a diverse portfolio will help investors slightly lessen the effects of systematic risk. Other investment hazards, such as industry risk, are based on systemic risk. It is feasible to diversify an investor's portfolio by buying a number of stocks in different industries.
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