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 ?
Since Merck pulled Zilmax, Reuters reports cattle feeders have switched to beta agonist rival product Ractopamine marketed as Optaflexx produced by Elanco Animal Health, which we think is irresponsible and unacceptable.
Scientific research suggests that thyroid beta agonists may play a role in the treatment of X-ALD and we are excited to collaborate with Viking to assess the potential of the company's novel collection of compounds in this area," stated Ali Fatemi, M.
Corticosteroids can reverse the desensitization of beta receptors and are said to be able to potentiate the response to beta agonists.
However, genetic testing may be helpful for severe asthmatics that are being treated with multiple therapies, including high-dose inhaled steroid and long-acting beta agonists, and are still uncontrolled and very symptomatic, according to Bleecker and Ortega.
The Global Initiative for Chronic Obstructive Lung Disease (GOLD) recommends long acting beta agonists be added to the treatment of patients in stage II.
15, 2010 /PRNewswire-FirstCall/ -- Despite national guidelines recommending that inhaled corticosteroid (ICS) be used alone as the preferred treatment for patients with mild persistent asthma, a new study finds that nearly two-thirds of these patients are taking more costly drugs that combine an ICS and a long-acting beta agonist (LABA) - with no apparent additional clinical benefit noted based on pharmacy and medical claims.
Zileuton CR Demonstrated a Statistically Significant Reduction in Need for Inhaled Beta Agonist and Provided Early and Sustained Improvement in Lung Function
In the study, patients with moderate to severe asthma who were inadequately controlled on the combination of inhaled corticosteroids (ICS) and long-acting beta agonists (LABA) were assigned to receive one of three doses (1 mg, 3 mg or 10 mg) of Aerovant or placebo by inhalation twice daily for 12 weeks.
Bronchial thermoplasty is a bronchoscopic procedure for the treatment of severe persistent asthma in patients 18 years and older whose asthma is not well controlled with inhaled corticosteroids and long acting beta agonists.
During the presentation, Asthmatx will provide an overview of the company and an update on the regulatory status of its Alair System, a device utilized in Bronchial Thermoplasty for the treatment of severe persistent asthma in patients 18 years and older whose asthma is not well controlled with inhaled corticosteroids and long acting beta agonists.
Highly selective estrogen receptor beta agonists have promise for safer therapies in women's health -
These proposed labeling changes would reserve the most effective asthma treatment -- the combination of inhaled corticosteroids and long-acting beta agonists -- until after a patient has failed on other treatment options and therefore may be at risk for severe outcomes, such as exacerbations and potentially death.