Beta

A measure of the risk arising from exposure to general market movements as opposed to idiosyncratic factors.

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Written by Ryan John Barcelona
Updated over a week ago

Beta (β or beta coefficient) of an investment is a measure of the risk arising from exposure to general market movements as opposed to idiosyncratic factors. The market portfolio of all investable assets has a beta of exactly 1. A beta below 1 can indicate either an investment with lower volatility than the market, or a volatile investment whose price movements are not highly correlated with the market.

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