https://en.wikipedia.org/wiki/Idiosyncrasy: An idiosyncrasy is an unusual feature of a person (though there are also other uses, see below). It also means odd habit. The term is often used to express eccentricity or peculiarity. A synonym may be "quirk".
The term can also be applied to symbols or words. Idiosyncratic symbols mean one thing for a particular person, as a blade could mean war, but to someone else, it could symbolize a surgery. By the same principle, linguists (such as Ferdinand de Saussure) state that words are not only arbitrary, but also largely idiosyncratic signs.
In psychiatry, the term means a specific and unique mental condition of a patient, often accompanied by neologisms. In psychoanalysis and behaviorism, it is used for the personal way a given individual reacts, perceives and experiences a common situation: a certain dish made of meat may cause nostalgic memories in one person and disgust in another. These reactions are called idiosyncratic.
In portfolio theory, risks of price changes due to the unique circumstances of a specific security, as opposed to the overall market, are called "idiosyncratic risk". This specific risk, also called unsystematic, can be nulled out of a portfolio through diversification. Pooling multiple securities means the specific risks cancel out. In complete markets, there is no compensation for idiosyncratic risk—that is, a security's idiosyncratic risk does not matter for its price. For instance, in a complete market in which the capital asset pricing model holds, the price of a security is determined by the amount of systematic risk in its returns. Net income received, or losses suffered, by a landlord from renting of one or two properties is subject to idiosyncratic risk due to the numerous things that can happen to real property and variable behavior of tenants.
No comments:
Post a Comment