How Many Stocks are Needed to Diversify Away Risk?

Advisors and their clients measure risk in many ways, but the most common measure is the volatility of a portfolio’s market value versus the market itself. Volatility may result from either systemic risk, the risk inherent in the stock market that cannot be diversified away with a single asset class, or non-systemic, the risk you can mitigate for your client by creating a diversified portfolio.