New answers tagged beta
beta_A = correlation_A_Index * (stdd_A / stdd_Index ) The difference you see is due to correlation. The correlation between A and the index is lower than B and the index, and that's why you're seeing a lower beta. The moral of the story is that risk is subjective, and in fact you need to understand how your portfolio is correlated with these stocks in ...
Let me give you an example to show how this can happen. Suppose you invest 0.50 in a coin flip that will pay 1 on heads and 0 on tails a month later. The monthly variance will be .5*(1-.5)^2+.5*(0-.5)^2=.5 so the standard deviation will be .25. This is significantly higher standard deviation than a market index or almost all stocks. So by one measure this is ...
Unlevered Beta (Beta asset) = Levered Beta / 1+(1-tax) Debt/Equity Similarly , Levered Beta (Beta equity) = Unlevered Beta * 1+ (1-tax) Debt /Equity
Top 50 recent answers are included