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Finance Dictionary and Glossary of Investment Terms
idiosyncratic risk
Definition 1.
The risk of price change due to the unique circumstances of a specific security, as opposed to the overall market. This risk can be virtually eliminated from a portfolio through diversification. also called unsystematic risk.
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Definition 2.
Risk that affects a very small number of assets, and can be almost eliminated with diversification. Similar to unsystematic risk.
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Definition 3.
Unsystematic risk or risk that is uncorrelated to the overall market risk. In other words, the risk that is firm-specific and can be diversified through holding a portfolio of stocks.
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