What is the difference between portfolio risk and stand alone risk

Most stocks have betas in the range of 0. Yes, if the correlation between Stock i and the market is negative i. If the correlation is negative, the regression line would slope downward, and the beta would be negative. However, a negative beta is highly unlikely. All rights reserved.

All Rights ReservedDr. Similar presentations. Upload Log in. My presentations Profile Feedback Log out. Log in. Auth with social network: Registration Forgot your password? Download presentation. Cancel Download. Presentation is loading. Investments are evaluated on the basis of several factors, including risk and return, which can be the key drivers in deciding what investments to make.

Having stated this, there are various types of risks involved in making portfolio-related decisions. The loss of principal risk involves the chance that an investor may not get back the money he or she has invested, or may lose the value or at least a portion of the original investment made.

Conservative investors are most concerned about this type of portfolio risk. Such investors value protecting the principal over seeking capital appreciation and prefer to accept lower returns for a higher degree of stability. Typically, a conservative investor seeks to minimize the loss of principal and risk. Loss of principal risk is present in essentially all investments, except for an interest bearing checking or savings account or a certificate of deposit. This type of risk assesses the chance of a government or state going bankrupt or failing to make payments on its debt, or not honoring its loan agreements.

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