Difference between revisions of "Beta"

Revision as of 18:38, 27 August 2020

Beta

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-The '''''Beta''''' measures the amount that investors expect the stock price to change for each additional 1% change in the market. The average beta of all stocks is 1.0. A stock with a beta lower than 1.0 is unusually insensitive to market movements. A stock with a beta > 1.0 is above average sensitive to market movements.
+Beta
-The formula for beta is:
-<math>\beta_i</math> = <math>\frac{\sigma_{im}}{\sigma^2_i}</math>
-Where <math>\sigma_{im}</math> is the [[Covariance|Covariance]]@math between the stocks returns and the market returns and <math>{\sigma^2_i}</math> is the variance of returns in the market.
 [[Category:finance]]