[wkey]

Additionally, the trick is to diversify away the idiosyncratic risk so that all that is left is systematic risk (risk common to all stocks that is unavoidable). One does this by picking stocks that are oppositely correlated so that volatility (aka risk which is measured through variance/ st. dev) is canceled out. The more stocks added to a portfolio, the more the idiosyncratic risk is diversified away; this is called holding the market portfolio. You can learn more my looking up the Capital Asset Pricing Model. Here are additional resources: https://drive.google.com/drive/folders/1l9TfhvUjCasEMPgWzJtn...