Search for a Term:

What is Diversifiable Risk?

Definition of Diversifiable Risk

Diversifiable Risk is the risk of price change to a specific security of a particular sector due to unique fluctuations, affecting only one company or one sector,rather than the market as a whole. However, while thespecificrisk may not be mitigated, the overall risk to an investor's portfolio can by diversifying the portfolio according to the specific risk involved. For example, in the current low oil price environment an investor may find that a particular oil company in which he owns shares has major operating exposure to non-profitable fields, so he can diversify his portfolio to counterbalance this risk by buying shares in other oil companies that do not have exposure to such non-productive assets, with the company having access to fields where the cost of production is lower, perhaps, and consequently there is still a profit to be made even with globally depressed oil prices. Alternatively, the investor may choose to capitalise on the low oil price by buying into a company that benefits from an operating environment in which oil prices are low, such as a major electricity company.
Do you have a question that has not yet been answered? Let us know.
Tel: 0207 0700 961 or Email: support@advfn.com

FTSE 100 Index

FTSE 100 Index intraday chart

Gulf Keystone

Gulf Keystone Chart
 GKP Chart  GKP Chat
 GKP Share Price  GKP Level 2
 GKP Info  Free ADVFN account

Top Investment Questions

Your Recent History
LSE
GKP
Gulf Keyst..
LSE
QPP
Quindell
FTSE
UKX
FTSE 100
LSE
IOF
Iofina
FX
GBPUSD
UK Sterlin..
Stocks you've viewed will appear in this box, letting you easily return to quotes you've seen previously.

Register now to create your own custom streaming stock watchlist.

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P:40 V:us D:20171120 13:14:58