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Examples of beta in a Sentence Noun a program that is currently in beta. Recent Examples on the Web: Noun The next desktop operating system for Macs has been in beta for months, and now Apple has given it a firm release date.
First Known Use of beta Noun 14th century, in the meaning defined at sense 1 Adjective , in the meaning defined above. Keep scrolling for more.
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Beta in Theory vs. Beta in Practice. Disadvantages of Beta. Key Takeaways Beta, primarily used in the capital asset pricing model CAPM , is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole.
Beta data about an individual stock can only provide an investor with an approximation of how much risk the stock will add to a presumably diversified portfolio.
For beta to be meaningful, the stock should be related to the benchmark that is used in the calculation. Article Sources. Investopedia requires writers to use primary sources to support their work.
These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate.
You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation.
Related Terms Understanding Positive Correlation Positive correlation is a relationship between two variables in which both variables move in tandem.
Benchmark for Correlation Values A benchmark for correlation values is a point of reference that an investment fund uses to measure important correlation values such as beta or R-squared.
Treynor Index The Treynor Index measures a portfolio's excess return per unit of risk.
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