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 ?
Beta-blockers are also important for the treatment of arrhythmias and coronary artery disease, in which they have been shown to improve survival and reduce the risk of future heart attacks and hospitalizations.
It would be premature to recommend the use of beta-blockers for these patients, until we conduct prospective clinical studies said Dr.
Patients who used beta-blockers had higher SBP and DBP and more acceptable MAP values compared with patients who did not use beta-blockers.
A 2013 stratified subset meta-analysis used data from landmark randomized controlled trials (RCTs) that evaluated beta-blockers vs placebo in patients with systolic heart failure to compare metoprolol succinate (MERIT-HF) vs placebo with bisoprolol (CIBIS-II), carvedilol (COPERNICUS), and nebivolol (SENIORS-SHF) vs placebo (table).
Beta-blockers are used to treat migraine as they counteract the effects of noradrenalin on blood vessels in the head.
Overall, the researchers found that adding beta-blockers as the second-line drug, in combination with thiazide diuretics or calcium channel blockers, caused an additional blood pressure reduction.
Evidence supports beta-blocker use in coronary artery disease and congestive heart failure.
Although patients on beta-blockers in this study were older and more severely injured than were those not taking beta-blockers, mortality rates for the two groups were similar, Dr.
Are beta-blockers efficacious as first-line therapy for hypertension in the elderly?
Beta-blockers are certainly necessary in many patients who have coronary artery disease; however, an attempt should be made to adjust the dosage to allow attainment of at least 70% predicated maximal heart rate or keep heart rate levels below that which cause ST depression or angina.
However, I wanted to inform you that verapamil is not a beta-blocker and, instead, is a calcium-channel blocker that produces its effects on the heart by blocking the transport of calcium into myocardial muscle cells, thus reducing excitability and contractility of the heart.

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