Blog Home / Financial Terms / Systemic Risk

Systemic Risk

Systemic risk refers to the potential risk of a collapse of the entire financial system due to one factor or a combination of factors

Systemic risk refers to the potential risk of a collapse of the entire financial system due to one factor or a combination of factors.

Why is Systemic Risk Important?

Studies examined the relationship between the correlations of stocks in the U.S. stock market and the overall market during the 2007 crisis. From August 2008 to March 2009, there was a freefall in the U.S. equity market, and correlations of stocks with each other dramatically increased from a pre-crisis average correlation level of 27% to over 50%.

Owais Siddiqui
1 min read
Related:
Financial TermsCPD
Dow Theory: Understanding the Primary Trend and the Secondary Trend
Sagar Pujari 04 July 2022
Financial TermsFRM
What is Standard Deviation?
Owais Siddiqui 19 September 2022
Financial TermsFRM
Hedging,Types and Importance
Owais Siddiqui 19 September 2022
Financial TermsFRM
What is Hedging?
Owais Siddiqui 19 September 2022
Financial TermsFRM
Variance
Owais Siddiqui 19 September 2022

Shares

Leave a comment

Your email address will not be published. Required fields are marked *