what is beta? what is alpha? investopedia
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What is 'Beta' What is 'Beta'. Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which calculates the expected return of an asset based on its beta and expected market returns. Beta is also known as the beta coefficient.
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Alpha (finance) Alpha is a measure of the active return on an investment, the performance of that investment compared to a suitable market index. An alpha of 1% means the investment's return on investment over a selected period of time was 1% better than the market during that same period, an alpha of -1 means the investment underperformed the market. Alpha is one of the five key measures in modern portfolio theory: alpha, beta, standard deviation, R-squared and the Sharpe ratio.
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- DEFINITION of 'Beta'. Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Beta is used in the capital asset pricing model (CAPM), a model that calculates the expected return of an asset based on its beta and expected market returns.Also known as beta coefficient.. beta of less than 1 means that the security will be less volatile than the market. A beta of greater than 1 indicates that the security's price will be more volatile than the market. For example, if a stock's beta is 1.2, it's theoretically 20% more volatile than the market.
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Beta: Gauging Price Fluctuations 1 Beta of 0 - Basically, cash has a beta of 0. In other words, regardless of which way the market moves, the value of cash remains unchanged (given no inflation).  Beta between 0 and 1 - Companies with volatilities lower than the market have a beta of less than 1 (but more than 0).
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Bettering Your Portfolio With Alpha And Beta Before we start, you'll need to understand a few key terms and concepts, namely alpha, beta, systematic risk and idiosyncratic risk. Beta - The return generated from a portfolio that can be attributed to overall market returns. Exposure to beta is equivalent to exposure to systematic risk. The alpha is the portion of a portfolio's return that cannot be attributed to market returns, and is thus independent from market returns.
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Alpha (finance) The alpha coefficient () is a parameter in the capital asset pricing model (CAPM). It is the intercept of the security characteristic line (SCL), that is, the coefficient of the constant in a market model regression. It can be shown that in an efficient market, the expected value of the alpha coefficient is zero.
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What is âbetaâ? A stock with a beta of more than one is more volatile than the market. If the market goes up, it tends to go up at a greater magnitude (i.e. market goes up 10%, stock goes up 15%). The higher the beta, the more volatile the stock.
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What is 'Beta' DEFINITION of 'Beta'. Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Beta is used in the capital asset pricing model (CAPM), a model that calculates the expected return of an asset based on its beta and expected market returns.eta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Beta is used in the capital asset pricing model (CAPM), a model that calculates the expected return of an asset based on its beta and expected market returns.
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Alpha Beta Alpha Beta was a chain of supermarkets in the United States. Stores under this brand existed between 1917 and 1995. Former Alpha Beta stores have all been purchased by other grocery chains and rebranded.
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- Beta is the slope of this line. Alpha, the vertical intercept, tells you how much better the fund did than CAPM predicted (or maybe more typically, a negative alpha tells you how much worse it did, probably due to high management fees). The quality of the fit is given by the statistical number r-squared.
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- DEFINITION of 'Unlevered Beta'. A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta of a company without any debt. Unlevering a beta removes the financial effects from leverage.The formula to calculate a company's unlevered beta is: Where: B L is the firm's beta with leverage. T c is the corporate tax rate. D/E is the company's debt/equity ratio. type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta of a company without any debt. Unlevering a beta removes the financial effects from leverage. The formula to calculate a company's unlevered beta is:
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Beta (finance) A beta greater than one generally means that the asset both is volatile and tends to move up and down with the market. An example is a stock in a big technology company. Negative betas are possible for investments that tend to go down when the market goes up, and vice versa.
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Alpha and Beta: CNBC Explains A positive alpha of 1.0 means the fund or stock has outperformed its benchmark index by 1 percent. A similar negative alpha of 1.0 would indicate an underperformance of 1 percent. A beta of less than 1 means that the security will be less volatile than the market.
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Beta: Gauging Price Fluctuations The beta that is calculated on Yahoo! compares the activity of the stock over the last five years and then compares it to the S&P 500. A beta of 0.00 simply means that the stock either is a new issue or doesn't yet have a beta calculated for it.eta measures a stock's volatility-the degree to which its price fluctuates in relation to the overall market. In other words, it gives a sense of the stock's market risk compared to the greater market. Beta is used also to compare a stock's market risk to that of other stocks.
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- Tweet. Beta is a numeric value that measures the fluctuations of a stock to changes in the overall stock market. Definition: Beta is a numeric value that measures the fluctuations of a stock to changes in the overall stock market.Description: Beta measures the responsiveness of a stock's price to changes in the overall stock market. On comparison of the benchmark index for e.g.efinition: Beta is a numeric value that measures the fluctuations of a stock to changes in the overall stock market. Description: Beta measures the responsiveness of a stock's price to changes in the overall stock market.
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Why value of beta for same company is different on different websites? Bi or beta, is the measure of a specific stock's market risk and shows that stock's volitility relative to the market. Beta is not always constant; it changes sometimes. The most common calculation for beta is to run a regression of the security's past returns against the past returns of the market (above formula).The most current and up-to-date beta would most likely be found in the newspaper in the business section where all the stocks are listed.It would probably be listed with the other stats, like P/E (price earnings). If not found there, try the finance section of Yahoo for a specific company.nswers. Best Answer: The formula looks like this: Ri = Rrf + Bi(Rm-Rrf) Can be read as: R sub i equals R sub rf plus beta (Bi) times R sub m minus R sub rf where R sub i is the required return, R sub rf is return on a risk-free investment, R sub m is the return on the entire market and (Rm-Rrf) is the risk premium.
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- Investment consulting is our only business. Over the years, Alpha has gained a diverse team of consulting analysts and a client base including some of the largest corporations, educational, philanthropic and healthcare organizations in Wisconsin.
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Why is BETA important when making investment decisions? Beta Beta is a measure of a stock's volatility in relation to the market. By definition, the market has a beta of 1.0, and individual stocks are ranked according to how much they deviate from the market. A stock that swings more than the market over time has a beta above 1.0. If a stock moves less than the market, the stock's beta is less than 1.0. High-beta stocks are supposed to be riskier but provide a potential for higher returns; low-beta stocks pose less risk but also lower returns.
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- Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.Beta is used in the capital asset pricing model (CAPM), a model that calculates the expected return of an asset based on its beta and expected market returns.Also known as beta coefficient.. beta of less than 1 means that the security will be less volatile than the market. A beta of greater than 1 indicates that the security's price will be more volatile than the market. For example, if a stock's beta is 1.2, it's theoretically 20% more volatile than the market.
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- A beta is a male who, instead of being alpha and manning up, completely bitches out. Can apply to many situations, but often refers to scenarios wi... A beta is a male who, instead of being alpha and manning up, completely bitches out. Can apply to many situations, but often refers to scenarios with women. Guy 1: Bro, hook me up with that girl's friend Guy 2: Fuck that.
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Definition of 'Beta' Definition of 'Beta'. Tweet. Beta is a numeric value that measures the fluctuations of a stock to changes in the overall stock market. Definition: Beta is a numeric value that measures the fluctuations of a stock to changes in the overall stock market.Description: Beta measures the responsiveness of a stock's price to changes in the overall stock market. On comparison of the benchmark index for e.g.efinition of 'Beta'. Tweet. Beta is a numeric value that measures the fluctuations of a stock to changes in the overall stock market. Definition: Beta is a numeric value that measures the fluctuations of a stock to changes in the overall stock market.
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- (Answer #1). The beta of a stock describes how the returns of the stock are correlated to the returns of the financial market as a whole. The value representing the returns of the financial market is that of the returns offered by a benchmark index.or example, in the US, the benchmark indexes that are used to determine the beta of stocks are the DJIA, the NASDAQ or the S&P 500 among many others. All firms that are in the same industry do not have the same beta as the financial fundamentals of each firm is different.
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Alpha Alpha is calculated by comparing the volatility of the portfolio and comparing it to some benchmark. The alpha is the excess return of the portfolio over the benchmark. It is important to Markowitz portfolio theory and is used as a technical indicator.
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Beta distribution Beta distribution. In probability theory and statistics, the beta distribution is a family of continuous probability distributions defined on the interval, 1] parametrized by two positive shape parameters, denoted by α and β, that appear as exponents of the random variable and control the shape of the distribution.
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Bonus depreciation tax laws set to expire at year end This law allowed first-year depreciation equal to 100 percent of the cost of qualifying property placed in service after September 8, 2010, and before January 1, 2012. A deduction of 50 percent of the asset’s cost is allowed for qualifying property placed in service after 2011 and before January 1, 2013.
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- Alpha Investment Consulting Group is an SEC registered institutional investment consulting firm. Robert Bukowski founded Alpha in 1989, driven by the desire to provide independent, unbiased investment advice and build long-term trusting client relationships.
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What are the best large cap mutual funds to invest in order to get good returns? What is 'Alpha'. 1. A measure of performance on a risk-adjusted basis. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index used as a benchmark, since they are often considered to represent the market’s movement as a whole. The excess returns of a fund relative to the return of a benchmark index is the fund's alpha.