Beta
A historical coefficient measuring an asset's return sensitivity to a chosen market benchmark.
Plain languagePractical exampleConnected reading
01
What is it?
A historical coefficient measuring an asset's return sensitivity to a chosen market benchmark.
02
Why does it matter?
It summarizes co-movement magnitude but does not show company-specific risk or maximum loss.
03
How should it be read?
Check period, frequency, benchmark, currency and stability of the estimate.
04
Common mistake
Assuming beta of 1.5 means the stock moves exactly 1.5 times the index every day.
A simple example
An asset with long-run beta of 1.2 can still move opposite the market on individual days.