Can the risk of a portfolio be reduced to zero by increasing the number of stocks in the portfolio?

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1237835

2026-07-31 05:50

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No, the risk of a portfolio cannot be reduced to zero by simply increasing the number of stocks. While diversification can lower unsystematic risk (the risk specific to individual stocks), it cannot eliminate systematic risk, which affects all stocks due to market-wide factors. Therefore, while adding more stocks can help mitigate some risks, it does not completely eliminate them.

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