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Beta is a way of measuring a stock’s volatility compared with the overall market’s volatility. By definition, the market as a whole has a beta of 1, and everything else is defined in relation ...
In finance, the beta (β or market beta or beta coefficient) is a statistic that measures the expected increase or decrease of an individual stock price in proportion to movements of the stock market as a whole. Beta can be used to indicate the contribution of an individual asset to the market risk of a portfolio when it is
Although there are different types of risk in the market, a stock’s beta represents perhaps the most important risk for many investors: its volatility. After all, most investors would prefer a ...
CBOE Volatility Index (VIX) from December 1985 to May 2012 (daily closings) In finance, volatility (usually denoted by "σ") is the degree of variation of a trading price series over time, usually measured by the standard deviation of logarithmic returns. Historic volatility measures a time series of past market prices.
If a stock has a beta below 1, the stock's price doesn't oscillate as much as its index does on average, while a beta above 1 reflects a more volatile stock. While volatility isn't perfectly equal ...
An estimation of the CAPM and the security market line (purple) for the Dow Jones Industrial Average over 3 years for monthly data.. In finance, the capital asset pricing model (CAPM) is a model used to determine a theoretically appropriate required rate of return of an asset, to make decisions about adding assets to a well-diversified portfolio.
Investors, whether beginner or seasoned professionals, all have a threshold for risk. Some prefer to play it safe and favor a low-risk investment plan while others are more advantageous with a ...
The portfolio of stocks with the lowest volatility has a higher return compared to the portfolio of stocks with the highest volatility. A visual illustration of the anomaly, since the relation between risk and return should be positive. Data for the related low-beta anomaly is also online available. The evidence of the anomaly has been mounting ...