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Week 2: Risk and Return, image, image, image - Coggle Diagram

- - - - Variance
        
        The expected squared deviation from the mean
      - Standard deviation (volatility)
        
        Square root of variance
    - - Expected (mean) Return
        
        Calculated as a weighted average of all possible returns, where the weights correspond to the probabilities
    - - Realized Return
        
        The return that actually occurs over a particular time period
        
        Average Annual Return
- - - - The expected return on a portfolio is the weighted average of the expected returns of the investments within it
  - - - Covariance only tells you whether assets move together or oppositely (positive or negative)
      - Correlation also tells you how strongly they move together - the degree of the relationship - ranges from -1 to +1
  - - - Systematic risk is inherent to the market as a whole, reflecting the impact of economic, geopolitical and financial factors
      - Unsystematic risk is a risk to a specific company or industry. Unsystematic risk can be mitigated through diversification
  - - - An efficient portfolio that contains all shares and securities in the market. The S&P 500 is often used as a proxy for the market portfolio