Diversification and Concentration Risk: A Comparison of Recent Drawdowns
- Measuring The 52-Week Drawdown: This chart shows how far each stock currently sits below its 52-week high, alongside the S&P 500. The 52-week drawdown measures the percentage decline from the highest price over the trailing year to the most recent price.
- A Look At The Data: The individual household names shown sit materially further below their 52-week highs than the S&P 500. That gap highlights how differently single stocks and a diversified index can behave over the same stretch of time.
- Investment Implications: A diversified index does not depend on any single company. Even the most familiar names can suffer deep drawdowns. This chart highlights how the performance of a broad market index may differ from that of individual securities over the same period.
