Beta (finance)/Definition: Difference between revisions
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A measure of the degree to which the rate of return of a share tracks that of the equity market as a whole (defined as the ''covariance'' | A measure of the degree to which the rate of return of a share tracks that of the equity market as a whole (defined as the ''covariance'' between the share's rate of return and the average market rate, divided by the ''variance'' of the market rate). If beta = 1 the share's rate of return moves in line with the market rate; if it is negative, it falls when the market rate rises. | ||
Revision as of 09:18, 11 March 2008
A measure of the degree to which the rate of return of a share tracks that of the equity market as a whole (defined as the covariance between the share's rate of return and the average market rate, divided by the variance of the market rate). If beta = 1 the share's rate of return moves in line with the market rate; if it is negative, it falls when the market rate rises.