Source: Reading 60 - Schweser pg. 175 (top of page)
Question: Can standalone risk be represented by both beta and standard deviation for a well-diversified portfolio? My initial thoughts: We know that beta is represented by the independent variables in the SML - and since beta includes the market portfolio, it can be said that beta reflects systematic risk. Standalone risk, in contrast, has inclusion of both systematic and unsystematic risk - however, this is only true for a concetrated portfolio. For a well-diversified portfolio, standalone risk is only systematic risk because unsystematic risk has been eliminated. So, this means - for a well-diversified portfolio, standalone risk (represented by standard deviation) equals systematic risk - BUT systematic risk is also represented by beta, which leads us to conclude that standalone risk can be both represented by standard deviation and beta. Is this right?