beta

beta
A measure correlating stock price movement to the movement of an index. Beta is used to determine the number of contracts required to hedge with stock index futures or futures options. The CENTER ONLINE Futures Glossary
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A Greek letter used by mathematicians to label the degree of sensitivity to changes in one variable to changes in another. The name for correlation of the changes. American Banker Glossary
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The measure of an asset's risk in relation to the market (for example, the S&P 500) 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 ( excess returns) (over and above a short-term money market rate) is expected to move 1.5 times the market excess return ( excess returns)). According to asset pricing theory, beta represents the type of risk, systematic risk, that cannot be diversified ( diversification) 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 comovement, not volatility. It is possible for a security to have a zero beta and higher volatility than the market. Bloomberg Financial Dictionary
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The relationship between the movement of an individual stock or a portfolio and that of the overall stock market. Chicago Mercantile Exchange Glossary
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A measurement of the relationship between the risk of an individual stock or stock portfolio and the risk of the overall market. The beta is a measure of the sensitivity of an investment's return to market movements. A diversified portfolio of high beta stocks is more risky than a diversified portfolio of low beta stocks. Exchange Handbook Glossary
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This is a measure of market risk. It determines how volatile a share price is ( i.e. how much a share tends to rise and fall over a period). The beta measures the distance between the high points and the low points, so the higher a share's beta, the more volatile it is. If you're investing for the long term, volatility doesn't matter much. However, if you're a short-term speculator, a highly volatile share can offer big rewards but also big potential losses if your timing is off.
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The beta reflects the sensitivity of a share or portfolio relative to the overall market development. The beta of the overall market is defined as 1. A security with a beta of 1 indicates its price moves exactly with the overall market. A beta greater than 1 is more volatile than the overall market, while a beta less than 1 indicates that the security's price is more stable than the market ( in general and over a long time period). NYSE Euronext Glossary

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   Beta records how volatile and risky investing in an individual stock is compared with the risk of the equity market as a whole. Beta measures how much the individual stock's excess return (the amount it earns in dividends and capital gains compared with a short-term money market rate) varies in comparison with movement in the excess return of the market as a whole (usually represented by the market's benchmark index). Beta compares excess return with short-term government paper because the latter investment is regarded as risk free. If the market's excess return rises by one percent and the stock's excess return rises during the same period by the same one percent then the stock's beta is one. The higher the beta the riskier the stock, reflected in its greater required return. A stock with a beta of more than one tends to be riskier than the market. A stock with a beta of less than one is less risky. High beta stocks tend to be in cyclical sectors such as property and consumer durables. Low beta stocks, also known as defensive stocks, tend to be in non-cyclical sectors such as food retailing and public utilities. Betas for individual stocks can vary according to whether the overall market direction is upwards or downwards. A stock may be riskier in a falling market than a rising market.

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Ⅰ.
beta UK US /ˈbiːtə/ US  /ˈbeɪtə/ adjective
IT used to describe a product or system that is at the second stage of development and that is being tested by a few customers before it is offered for sale: »

beta software

Ⅱ.
beta UK US /ˈbiːtə/ noun [C, usually singular]
IT BETA VERSION(Cf. ↑beta version): »

The beta is still being tested.

FINANCE, STOCK MARKET BETA COEFFICIENT(Cf. ↑beta coefficient): »

Shares with a beta greater than one are more volatile than the market.

»

During the recent bull market, high beta shares substantially outperformed low beta shares.

Compare ALPHA(Cf. ↑alpha)

Financial and business terms. 2012.

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Look at other dictionaries:

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  • beta — |ê| s. f. 1. Mancha comprida ou faixa de cor diferente nas penas ou pelo do animal. = LISTA, LISTRA 2. Qualquer mancha comprida. 3. Mancha na pele. 4. Filão, veio. 5.  [Marinha] Corda ou cabo. 6.  [Marinha] Talha na extremidade dos guardins. 7. … …   Dicionário da Língua Portuguesa

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  • bêta- — ❖ ♦ Élément (écrit aussi β ) utilisé en chimie organique pour caractériser le deuxième d une série d isomères, indiquer la présence dans un composé d un atome de carbone séparant deux fonctions, préciser la structure stéréochimique des sucres,… …   Encyclopédie Universelle

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