Risk
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Volatility: - This is a measure of the fluctuations in the price of an asset over time. A more volatile asset is considered riskier because it is subject to larger price swings. -
Standard deviation: - This is a statistical measure that shows how much an investment's returns vary from its average over a given time period. A higher standard deviation indicates a higher level of risk. -
Beta: - This is a measure of the volatility of an asset relative to the market as a whole. A beta of 1 indicates that the asset is as volatile as the market, while a beta greater than 1 indicates higher volatility and a beta less than 1 indicates lower volatility.
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Diversification: - This is the practice of spreading investments across a range of assets, sectors, and geographies in order to reduce the impact of any one investment on the portfolio as a whole. -
Risk management tools: - These include instruments such as stop-loss orders and options contracts, which can be used to limit potential losses or protect against price movements in specific assets. -
Asset allocation: - This is the process of dividing an investment portfolio among different asset classes, such as stocks, bonds, and cash, in order to balance risk and return.
