Editing Specific risk

{{Short description | Template: "Specific risks in finance, diversifiable and limited."}}
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In [[finance]], a '''specific risk''' is a [[risk]] that affects a very small number of [[Asset|assets]]. This is sometimes referred to as "[[unsystematic risk]]". In a balanced portfolio of assets there would be a spread between general market risk and risks specific to individual components of that portfolio. Determination of the extent of exposure to individual risks is made using models such as [[Treynor-Black model|Treynor-Black]] in which the optimal share of a security is inversely proportional to the square of its specific risk.<ref>{{Cite web |title=What Is Specific Risk in Investing? |url=https://www.investopedia.com/terms/s/specificrisk.asp |access-date=2015-12-15 |website=Investopedia |language=en}}</ref>

An example would be news that is specific to either one [[stock]] or a group of companies, such as the loss of a patent or a major natural disaster affecting the company's operation.

Unlike [[systematic risk]] or [[market risk]], specific risk can be diversified away. In fact, most unsystematic risk is removed by holding a portfolio of about twenty-five to thirty securities.<ref>{{Cite web |title=FCA Specific Risk Glossary |url=https://www.handbook.fca.org.uk/handbook/glossary/G1615.html |access-date=2015-12-15 |website=FCA.org}}</ref>

==References==
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[[Category:Financial risk]]


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