Beta is a measure of how volatile a particular investment is compared to the stock market as a whole. A higher beta by definition means more volatility, which can also mean greater risk and the potential for greater reward. Beta is a measure of a stock’s systematic, or market, risk, and offers investors a good indication of an issue’s volatility relative to the overall stock market. The market beta is set at 1.00, and a stock’s beta is calculated by Value Line , based on past stock-price volatility. Definition: Beta is a numeric value that measures the fluctuations of a stock to changes in the overall stock market. Description: Beta measures the responsiveness of a stock's price to changes in the overall stock market. The beta (β) of an investment security (i.e. a stock) is a measurement of its volatility of returns relative to the entire market. It is used as a measure of risk and is an integral part of the Capital Asset Pricing Model (CAPM). Beta is a measure of a stock 's volatility relative to the overall market. It is most often calculated using a stock's movements relative to the S&P 500 Index over the trailing 12-month period. How Does Beta Work? A stock 's beta is determined by analyzing how much its return fluctuates in relation to the overall market return. A beta of exactly 1 means that a stock, fund, or investment portfolio historically moves with the market, generally defined as the S&P 500. In other words, if the S&P 500 falls by 5%, a stock with a beta of 1 can be expected to do the same, absent any stock-specific catalysts.
A stock’s beta or beta coefficient is a measure of a stock or portfolio's level of systematic and unsystematic risk based on in its prior performance. The beta of an individual stock only tells an investor theoretically how much risk the stock will add (or potentially subtract) from a diversified portfolio.
Beta. Beta is the systematic risk (volatility) relative to the market. The beta coefficient "A coefficient measuring a stock's relative volatility to a market index, such as the A beta of one means the portfolio moves in tandem with the benchmark. Many traditional index funds and ETFs are "capitalization-weighted." This means that the individual stocks within the index are based on each stock's total market 15 Jun 2012 A recent study looks at how market exposure can affect stock performance. In the CAPM, beta is the measure of the volatility, or systematic risk, of a security or The term premium means that investors are compensated on Most stocks have a positive beta, which means that most stocks move in the If the beta is greater than 1, then the stock moves more than the market does in the Investors are rational, mean–variance optimizers. Since the stock's CAPM risk premium is the product of beta and the MRP, a stock with a beta of 0.5 has half
Utility stocks, for instance, tend to be more resistant to market moves and will as such tend to have low beta. On the other hand, highly volatile start-ups or
8 Oct 2019 Beta can range from negative to positive infinity. Here's what beta means at various intervals: Negative – A negative beta score implies that a 28 Aug 2019 Beta is a measure of volatility or risk of an investment in relation to the market. capital asset pricing model (CAPM) to calculate the expected return of the stock. Variance shows how far the values are spread from the mean. There's no way to perfectly predict the fate of a stock, but there are some metrics that can definition. Beta is a number that helps rate how dramatically a stock is
Beta is a measure of a stock 's volatility relative to the overall market. It is most often calculated using a stock's movements relative to the S&P 500 Index over the trailing 12-month period. How Does Beta Work? A stock 's beta is determined by analyzing how much its return fluctuates in relation to the overall market return.
Beta is a measure of a stock's volatility in relation to the market. By definition, the market has a beta of 1.0, and individual stocks are ranked according to how much they deviate from the market. A stock that swings more than the market over time has a beta above 1.0.
15 Feb 2013 However, quite contrary, with a historic volatility of 138.6% it is a very volatile stock. The key take-away here is that low beta does not mean low
22 Oct 1997 Beta is the sensitivity of a stock's returns to the returns on some A beta of 1.5 does not mean that is the market goes up by 10 points, the stock 3 Apr 2018 that affect the whole system and not just individual stocks. In a portfolio context, systematic risk is important because it can't be diversified and
A stock beta is an assessment of a stock's tendency to undergo price changes, or its volatility, as well as its potential returns compared to the market in general. Beta. The measure of an asset's risk in relation to the market (for example, the S&P500) or to an alternative benchmark or factors. A fund with a beta greater than 1 is considered more volatile than the market; less than 1 means less volatile. So say your fund gets a beta of 1.15 -- it has a history of fluctuating 15% more than Beta can also be negative, meaning the stock's returns tend to move in the opposite direction of the market's returns. A stock with a beta of −3 would see its return decline 9% (on average) when the market's return goes up 3%, and would see its return climb 9% (on average) if the market's return falls by 3%.