Beta (finance)/Definition: Difference between revisions
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A | A measure of the degree to which the price of a share tracks the market average (defined as the ''covariance'' (qv) between the price of the share and the average market price, divided by the ''variance'' (qv) of the market price). If beta = 1 the share price moves in line with the market price; if it is negative, it falls when the market price rises. (Also applied to rates of return). | ||
Revision as of 06:05, 1 March 2008
A measure of the degree to which the price of a share tracks the market average (defined as the covariance (qv) between the price of the share and the average market price, divided by the variance (qv) of the market price). If beta = 1 the share price moves in line with the market price; if it is negative, it falls when the market price rises. (Also applied to rates of return).