Portfolio Risk & Return

Concentration Risk

The risk that comes from having too much riding on one thing — one stock, one industry, one region or one theme — so that a setback there hits the whole portfolio hard. Concentration is not always obvious from the list of holdings: two broad index funds can own many of the same large companies, and several different stocks can all depend on the same trend. Correlation is the tell, because holdings that move together behave like one large position. Concentration is the flip side of diversification: it raises both the chance of standout results and the size of the losses when the bet goes wrong.

Educational information, not investment advice. See it applied across the screener →