How is risk and return related to the market as a whole

Question

How is risk and return related to the market as a whole? Give an example.

Answer 1

A stock has an expected return of 15 percent and a volatility of 20 percent. But how much of such risk and return are associated to the market as a complete? The less which can be attributed to the behaviour of the market, the good will that stock is for diversi?cation purposes.