Diversifiable risk is the relevant portion of risk attributable to market factors that affect all firms.

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Diversifiable risk, also known as unsystematic risk, is the portion of risk that is unique to a specific company or industry and can be mitigated through diversification. This type of risk is not attributable to market factors that affect all firms and can be reduced by investing in a diversified portfolio.

Diversifiable Risk Is the Relevant Portion of Risk Attributable to Market