topic--one of my friends asked me this...the desk hes working on this summer told him to think about the answer. what do you guys think? he was told to describe the type of risk measured in one or two words. i would think that correlation is directional risk, but other than that im blanking
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nonsystemic risk
I think he means each one needs its own word describing the type of risk each term represents?
rickyross, im pretty sure you have systemic and systematic risk confused...but in any case, i would guess systematic risk, seeing as all of those terms involve some sort of relation to a benchmark index/the broader market.
Yes yes, that's the problem-they wanted different terms for each word but they are all seemingly quite similar...
When I see those words and I have to combine it in one word, I would say 'sensitiveness' or a better word would be 'volatility' (risk).
If you have to relate it to systematic/unsystematic risk, I would say systematic since beta measures how sensitive a security/portfolio is to the changes in the market portfolio, which is something also measured by, for example, correlation, but instead it shows how two securities/portfolios are related towards each other when changes in the market portfolio arises.
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