Concentration Risk
Also called: single name risk, concentrated position
Concentration risk is the exposure that comes from a portfolio depending too heavily on one position, sector, counterparty or region. It's the risk diversification is designed to remove and the one employees are most exposed to, since stock compensation ties both salary and savings to a single company. Two-thirds of the benefit of diversification arrives in the first twenty holdings, which is why concentration is usually an unpaid risk.
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