---
title: Passive Investing, Diversification Risk and Financial Stability
url: https://www.ml-quant.com/papers/repec/bon-boncrc-crctr224-2025-793/
site: ML-Quant (https://www.ml-quant.com)
updated: 2026-11-14
license: Summaries CC BY 4.0; links go to the original sources
index: https://www.ml-quant.com/llms.txt
identifier: RePEc:bon:boncrc:crctr224_2025_793
source_url: https://econpapers.repec.org/RePEc:bon:boncrc:crctr224_2025_793
featured: 2026-11-13
citations: unknown
topic: Portfolio & Allocation
---


# Passive Investing, Diversification Risk and Financial Stability

Passive ownership raises return correlations and reduces achievable portfolio diversification by 2.1%, shifting risk from firm-specific to market-wide components.

- Source: https://econpapers.repec.org/RePEc:bon:boncrc:crctr224_2025_793
- Identifier: RePEc:bon:boncrc:crctr224_2025_793
- Released: 2026-11-12
- First featured: Quant Letter No. 139 (2026-11-13): https://www.ml-quant.com/issues/2026-11-13/
- Citations (Semantic Scholar): not tracked
- Published in: not yet
- Topic: Portfolio & Allocation
- Authors: I. Gufler

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