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 ?
More recently and due to improved testing techniques, the relationship between authentic beta-endorphin and labour stress has not been established (Harbach et al., 2008).
Beta-endorphin production by the fetal Leydig cell: regulation and implications for paracrine control of Sertoli cell function.
Beta-endorphin concentration after administration of sucrose in preterm infants.
Brain beta-endorphin and other opioids are involved in restraint stress-induced stimulation of the hypothalamic-pituitary-adrenal axis, the sympathetic nervous system, and the adrenal medulla in the rat.
Continuous subcutaneous administration of high-dose salmon calcitonin in bone metastasis: pain control and beta-endorphin plasma levels.
So now beta-endorphin joins the cohort of neuro-messengers such as the earlier discussed serotonin, both theorized to be involved in mood regulation and in pain transmission.
CRF causes the basophilic cells of the anterior pituitary gland to induce proopio-melanocortin, a polyprotein which is cleaved to form adrenocorticotropic hormone (ACTH) and beta-endorphin. Opiates function to relieve pain during a fight-or-flight stress situation (Black, 1994).
For those who are unable to articulate their pain, such as infants, unconscious adults, or unborn children, the perception of pain must be deduced, indirectly, by observing other biological responses, such as a physical withdrawal of limbs from painful stimulus, a change in vital signs (blood pressure and pulse rate go up), or a release of stress hormones (cortisol beta-endorphin).
[46] measured the circulating beta-endorphin levels before and after exercise testing.
In a few promising studies, clinical investigators have injected an endorphin called beta-endorphin under the membranes surrounding the spinal cord.
The popular idea of the "endorphin rush" was born in the 1980s and 90s, when a series of studies showed that the levels of beta-endorphin increase in your bloodstream during the course of a run.