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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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
This study developed and characterized a FORS for the remote and real-time measurements of beta radiation. The FORS consisted of the sensing probe with an aluminium foil reflector, transmitting plastic optical fiber, and light-measuring system that comprised a photomultiplier tube, preamplifier, multichannel analyzer, and laptop computer.
Whether adjunctive beta radiation is an effective alternative is unclear from this dataset, but the results suggest that further investigation is needed.
High doses of external gamma radiation can damage thyroid gland tissue and lead to hypothyroidism as well as benign or malignant nodules, but the effects of low doses, especially of beta radiation such as [sup.131]I, are less certain.
It occurred by 8 months in 27% of patients randomized to placebo and 17% who received beta radiation. At 2 years the rate of target vessel revascularization remained significantly lower in the active treatment arm: 28%, compared with 37% with placebo.
When the nuclei of the atoms making up a lump of radioactive material decay, they may produce not only alpha and beta radiation but the very high energy, and hence ionizing, gamma radiation.
The particulate sample provides readings of overall alpha and beta radiation and also is used to determine the radiochemistry of the particulates.
Some examples of these are: the discovery of the radioactivity of thorium, and the new elements polonium and radium (1898); the identification of alpha and beta radiation (1899); the Rutherford/Soddy disintegration theory (1902); the discovery of isotopes (1909); the Rutherford nuclear theory of the atom (1911); the Bohr theory of the atom (1913); the disintegration of nitrogen atoms (1919); the discovery of artificial radioactivity (1933); and the discovery of nuclear fission (1938).
They emit penetrating gamma radiation that is much more of a hazard than the alpha or beta radiation from cesium, cobalt, strontium or polonium,' LaMastra said.[3]
"Unlike other detectors, this spectrometer is more efficient, and able to measure and quantify both gamma and beta radiation at the same time," said David Hamby, an OSU professor of health physics.
The measuring principle of thickness gauge is based on the attenuation of Beta radiation emitted by a nuclear source as it passes through a material.