A fuller guide to this term is on the way. In the meantime, the related terms below explain the ideas around it.
Related MoneyPedia terms
- VolatilityHow sharply and often an investment's price swings up and down over a given period.
- BetaA measure of how much an investment tends to move compared with the overall market.
- Risk ToleranceHow much investment ups and downs you can handle emotionally and financially without changing your plan.
- CorrelationA measure of how closely two investments move together, which helps you build a diversified mix.
- Risk-Adjusted ReturnA way of measuring investment gains that accounts for how much risk was taken to achieve them.
- DiversificationSpreading your money across many different investments so a drop in any single one does less damage.
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Plain-English education — not personalized legal, tax, or investment advice.