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 ?
A few studies discussed the safety burden of long acting beta agonists in the treatment of asthma or COPD and one cohort study questioned their efficacy.
While the aforementioned studies discuss the safety burden and even the efficacy of long acting beta agonists as adjunct therapy for the treatment of asthma, none of these studies propose a safe and equally efficient treatment protocol.
The same effect has subsequently been noted with newer beta agonists such as albuterol and salmeterol.
Administration of inhaled beta agonists may reverse hypoxic pulmonary vasoconstriction by beta 2 stimulation, increasing perfusion to underventilated lung regions.
Like Russia, China maintains a zero tolerance for the presence of residues of hormones and beta agonists in beef and pork and applies trade restrictive, non-science-based standards for food-borne pathogens in meat.
The current impasse over beta agonists and ractopamine in particular poses a number of especially difficult challenges for the U.
Conducted by the NHLBI's Asthma Clinical Research Network, the study compared three treatment methods: doubling the dose of inhaled corticosteroids alone, supplementing a low dose of inhaled corticosteroids with a long-acting beta agonist (salmeterol), and supplementing a low dose of inhaled corticosteroids with a long-acting anticholinergic drug (tiotropium bromide).
Montelukast also improved patient-reported daytime asthma symptoms and the need for intermittent beta agonist use (p < .
In this clinical trial, zileuton CR demonstrated a significant reduction in the use of inhaled beta agonists and provided early and sustained improvement in pulmonary function compared with placebo CR.
The Global Initiative for Chronic Obstructive Lung Disease (GOLD) recommends long acting beta agonists be added to the treatment of patients in stage II.
Based on the drug's pharmacologic profile, I believe ZYFLO may be an effective treatment for patients already taking beta agonists and high-dose steroids that have failed to sufficiently control their asthma symptoms.