Beta
From MarketsWiki
Beta measures the price volatility of the portfolio in comparison to a specific benchmark, such as the S&P 500.[1][2] For example:
- A portfolio that has a beta of 1 should increase 10% when market prices increase 10%.
- A fund with a beta of 1.10 is expected to perform 10% better than the market in a rising market, but 10% worse in a declining market.
- A portfolio with a beta of less than 1.0 indicates that it is less volatile than the market or index.
Another example:
A fund with a beta of 0.7 has experienced gains and losses that are 70% of the benchmark's changes. A beta of 1.3 means the total return is likely to move up or down 30% more than the index. A fund with a 1.0 beta is expected to move in sync with the index.[3]
References
- ↑ "Hedge fund terms”. Liberty Gateway. Retrieved on Jan. 27, 2008.
- ↑ "Glossary”. Russell. Retrieved on Feb. 6, 2008.
- ↑ "Hedge Fund Glossary ”. Hedge Fund Lounge. Retrieved on Feb. 17, 2008.
