Beta

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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. Roughly speaking, a security with a beta of 1.5, will have move, on average, 1.5 times the market return. [More precisely, that stock's excess return (over and above a short-term money market rate) is expected to move 1.5 times the market excess return).] According to asset pricing theory, beta represents the type of risk, systematic risk, that cannot be diversified away. When using beta, there are a number of issues that you need to be aware of: (1) betas may change through time; (2) betas may be different depending on the direction of the market (i.e. betas may be greater for down moves in the market rather than up moves); (3) the estimated beta will be biased if the security does not frequently trade; (4) the beta is not necessarily a complete measure of risk (you may need multiple betas). Also, note that the beta is a measure of co-movement, not volatility. It is possible for a security to have a zero beta and higher volatility than the market.

Beta

A measure of a security's or portfolio's volatility. A beta of 1 means that the security or portfolio is neither more nor less volatile or risky than the wider market. A beta of more than 1 indicates greater volatility and a beta of less than 1 indicates less. Beta is an important component of the Capital Asset Pricing Model, which attempts to use volatility and risk to estimate expected returns.

beta

A mathematical measure of the sensitivity of rates of return on a portfolio or a given stock compared with rates of return on the market as a whole. A high beta (greater than 1.0) indicates moderate or high price volatility. A beta of 1.5 forecasts a 1.5% change in the return on an asset for every 1% change in the return on the market. High-beta stocks are best to own in a strong bull market but are worst to own in a bear market. See also alpha, capital-asset pricing model, characteristic line, portfolio beta.

Beta.

Beta is a measure of an investment's relative volatility. The higher the beta, the more sharply the value of the investment can be expected to fluctuate in relation to a market index.

For example, Standard & Poor's 500 Index (S&P 500) has a beta coefficient (or base) of 1. That means if the S&P 500 moves 2% in either direction, a stock with a beta of 1 would also move 2%.

Under the same market conditions, however, a stock with a beta of 1.5 would move 3% (2% increase x 1.5 beta = 0.03, or 3%). But a stock with a beta lower than 1 would be expected to be more stable in price and move less. Betas as low as 0.5 and as high as 4 are fairly common, depending on the sector and size of the company.

However, in recent years, there has been a lively debate about the validity of assigning and using a beta value as an accurate predictor of stock performance.

References in periodicals archive ?
As it does so, it releases high-energy electrons, which are also known as beta particles.
greater hazard than those that emit beta particles and gamma radiation.
Unfired DU munitions are encased in thin metal jackets that seal in alpha and beta particles and allow only very slight gamma emissions well below regulatory safety limits.
Samarium's less energetic beta particles should allow the new preparation to be used in a broad range of joints, Straus says--not only the knee but also the finger, elbow, shoulder, and hip.
Examples include ultraviolet, X-rays, and gamma rays from the electromagnetic spectrum and subatomic particles such as alpha particles, beta particles, and neutrons.
These new detectors can be used for direct, detection and spectrometry of beta particles and low energy X-rays, or, when coupled with scintillators, for sensing gamma rays and higher energy X-rays.
A beta detector also measures light to determine the presence and concentration of beta particles.
The scientists also suggested that other types of radiation, such as beta particles, might provide a greater margin of safety for treated vessels, nearby healthy tissue, and operating-room staff.
In 1914, however, the English physicist James Chadwick (1891-1974) showed that this was not true of beta particles.
To make the new technique effective for therapy calls for devising a way to get the radionuclides to the exact place desired and also to choose a combination whose end products will have sufficiently high levels of beta particles, Mausner says.
Beta particles emitted by the tritium excite the phosphors and cause a substantial glow, thus providing sight pictures in low light and no light situations.
Beta particles might be fired out of a nucleus with all the energy to be expected from the loss in mass as one nucleus broke down into another.