The Risk of a Company Versus the Market

The way academics measure risk is that random up and down. This is different to volatility, which is something that you can't identify immediately because it's typically short term. We've spoken about how in a stock portfolio, you can't diversify something. It's called the market risk. But going back to our example of how interest rates would rise, we can expect some of them to perform better when interest rates go up. Now, this is where you can diversify a lot of the risks. At this level, we can consider things like bonds, shares, overseas and Australian, cash, term deposits and a whole heap of things in between. And depending on which asset class, we

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