Equity Risk


Equity risk is the risk that one's investments will depreciate because of stock market dynamics causing one to lose money.

The measure of risk used in the equity markets is typically the standard deviation of a security's price over a number of periods. The standard deviation will delineate the normal fluctuations one can expect in that particular security above and below the mean, or average. However, since most investors would not consider fluctuations above the average return as "risk", some economists prefer other means of measuring it.

Financial risk and financial risk management
Categories
Credit risk
  • Consumer credit risk
  • Concentration risk
  • Securitization
  • Credit derivative
Market risk
  • Interest rate risk
  • Currency risk
  • Equity risk
  • Commodity risk
  • Volatility risk
Liquidity risk
  • Refinancing risk
Operational risk
  • Operational risk management
  • Legal risk
  • Political risk
  • Reputational risk
  • Settlement risk
  • Profit risk
  • Systemic risk
Financial risk modeling
  • Market portfolio
  • Risk-free rate
  • Modern portfolio theory
  • Risk parity
  • RAROC
  • Value at risk
  • Sharpe ratio
Basic concepts
  • Diversification
  • Systematic risk
  • Hedge
  • Risk pool
  • Expected return
  • Hazard
  • Risk
  • Investment management
  • Financial economics
  • Mathematical finance

Famous quotes containing the words equity and/or risk:

    “If equity and human natural reason were allowed there would be no law, there would be no lawyers.”
    —Christina Stead (1902–1983)

    “Any time you take a chance you better be sure the rewards are worth the risk because they can put you away just as fast for a ten dollar heist as they can for a million dollar job.”
    —Stanley Kubrick (b. 1928)