Price Risk

Heroes? They risk it all on getting the bad guys. Investors? They risk at all on price risk.

The risk of decline in the price—and therefore the value—of a security...is the price risk. What increases the risk of a decline in price? High-volatility securities. More stable stocks are more reliable stocks, with less price risk.

Of course, savvy investors will hedge against price risk, spreading their eggs in many baskets. Put options and inverse ETFs are two securities designed for hedging against price risk...yeah, the cool kid securities.

What makes a company have more price risk than another? Larger, more established businesses usually have a lower price risk relative to startups. Other than that, certain markets, like commodities markets, are expected to be more volatile on the reg.