Talk:Beta (finance)/Archives/2012

gold stocks negative beta?

The idea that "people get out of the market and go into gold" is a cute hypothesis, but I think that it is not in fact true. The statement in the article that gold related stocks have negative beta needs a citation or it should be removed. A more interesting fact is that gold-mining stocks have high risk but very low beta. This illustrate the important difference between beta and risk.

financial beta and returns

I fail to see something in the article. I quote:

If the market with a beta of 1 is expected to return 8%, a stock with a beta of 1.5 should return 12%.

That seems ok if the $\alpha _{a}$ coefficient in the regression is null, but not otherwise. For example, it is clear that if all the returns of $a$ are incremented by the same amount, its beta does not change at all. I wait for comments before modifying the article. --zeycus 8:04, 29 August 2007 (UTC)

I wrote the Investing section for this article. I see your point, and as zeycus pointed out the statement is not always true...I probably should have stated it differently. I have made the necessary change. --JohnDoe0007 09:32, 29 October 2007 (UTC)

new sections necessary?

The sections "Estimation of Beta" and "Extreme and interesting cases" seem to be almost useless at this point. I see the attraction to adding them to highlight certain factoids, but at no time did they ever really contain sufficient information that would warrant new sections. They essentially restate things that have already been fleshed out, better and with more detail, in more appropriate sections of the article.

I suggest these sections be taken out of the article entirely, as they really add no value to the article, and in my opinion, actually detract from its encyclopedic integrity.

I ask for feedback on these thoughts, and if no one disagrees or if enough agree, I will remove the sections after some time. --JohnDoe0007 09:44, 29 October 2007 (UTC)

Beta is not volatility!

I fixed the first sentence which defined beta as a "measure of volatility". This is very misleading. Every stock has a specific risk that is uncorrelated with the market. It is possible for a low beta stock to have a high volatility. When it comes to portfolios, "beta=volatility" is closer to the truth, but then only if the portfolio is highly diversified. A quant (talk) 02:49, 24 May 2008 (UTC)

attractiveness?

I removed the following; i can't make any sense of 'good prospects' or 'attractiveness'.

The beta movement should be distinguished from the actual returns of the stocks. For example, a sector may be performing well and may have good prospects, but the fact that its movement does not correlate well with the broader market index may decrease its beta. However, it should not be taken as a reflection on the overall attractiveness or the loss of it for the sector, or stock as the case may be. Beta is a measure of risk and not to be confused with the attractiveness of the investment. —Preceding unsigned comment added by 170.170.59.138 (talk) 22:07, 25 April 2009 (UTC)

The first statement is incorrect - Beta is not correlation

Beta is not correlation. It is the relationship between the moves in the stock and the moves in the market, capturing coviarance and variance. — Preceding unsigned comment added by 94.169.67.95 (talk) 12:00, 23 March 2012 (UTC)

-1 beta

"If it were possible to invest in an asset with positive returns and beta −1 as well as in the market portfolio (which by definition has beta 1), it would be possible to achieve a risk-free profit"

Wouldn't a beta of -1 ensure that whenever the market portfolio made money, the -1 beta asset would make less? So you would end up with the risk-free rate. — Preceding unsigned comment added by 121.44.55.245 (talk) 05:09, 14 July 2012 (UTC)