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 ?
One is to add lactase to the milk, which pre-digests the sugar into glucose and galactose.
Previous studies have shown that 40% babies presented with infant colic suffered from lactase enzyme deficiency,6,7 an intestinal enzyme that breaks down the lactose into simple sugar (galactose and glucose) in small intestine.8
Effect of a single dose of lactase on symptoms and expired hydrogen after lactose challenge in lactose-intolerant subjects.
European lactase persistence genotype shows evidence of association with increase in body mass index.
Predictive values of lactase activity are lower, probably due to the presence of primary lactase deficiency in coeliac patients.
A lactase deficiency does not allow lactose to be broken into absorbable nutrients within the intestinal tract.
Lactase deficiency is largely inherited (congenital and familial deficiency), though a condition known as secondary lactase deficiency can result from inadequate lactase production and can be caused by a problem with the small intestine, such as surgery, or another condition, such as Crohn's disease, ulcerative colitis, chemotherapy, celiac disease, or gastroenteritis.
Markers of intestinal inflammation, lactase deficiency, and intestinal permeability were all similar between the children with and without autism.
Lactose intolerance, in which the body does not produce enough lactase (the enzyme that breaks down lactose--milk sugar), may benefit from lactase supplementation.
INTRODUCTION: Adult type hypolactasia develops due to decreased activity of the enzyme lactase phlorizin hydrolase and stops its synthesis in mammals after the weaning period.
Lactose intolerance, caused by your small intestine being unable to break down lactase, an enzyme found in dairy foods.
Standard cow's milk contains a fair amount of lactose, a sugar that gives milk its sweetness and that must be broken down by lactase, a digestive enzyme produced in the small intestine of most mammals.