correlation How can beta be negative? Quantitative Finance Stack Exchange

The health effect from exposure to alpha particles depends greatly on how a person is exposed. Alpha particles lack the energy to penetrate even the outer layer of skin, so exposure to the outside of the body is not a major concern. If alpha-emitters are inhaled, swallowed, or get into the body through a cut, the alpha particles can damage sensitive living tissue. The way these large, heavy particles cause damage makes them more dangerous than other types of radiation.

Beta Particles

1. This is the expected benchmark’s return minus the risk-free rate.
2. CAPM is used to price risky securities and to estimate the expected returns of assets, considering the risk of those assets and the cost of capital.
3. In theory, this security should vastly outperform the market to the upside but keep in mind that during downturns, the security would suffer significantly larger losses than the benchmark.
4. A beta coefficient shows the volatility of an individual stock compared to the systematic risk of the entire market.
5. Gamma rays (γ) are weightless packets of energy called photons.
6. Levered beta (equity beta) is a measurement that compares the volatility of returns of a company’s stock against those of the broader market.

So by adding a stock with this beta value, you are making your portfolio less risky. These have some similarity to bonds, in that they tend to pay consistent dividends, and their prospects are not strongly dependent on economic cycles. They are still stocks, so the market price will be affected by overall stock market trends, even if this does not make sense. They can easily penetrate barriers that can stop alpha and beta particles, such as skin and clothing. Gamma rays have so much penetrating power that several inches of a dense material like lead, or even a few feet of concrete may be required to stop them. Gamma rays can pass completely through the human body; as they pass through, they can cause ionizations that damage tissue and DNA.

Is Beta a Good Measure of Risk?

Gamma rays can pass completely through the human body; as they pass through, they can cause damage to tissue and DNA.. Radioactive decay occurs in unstable atoms called radionuclides. Levered beta includes both business risk and the risk that comes from taking on debt. However, since different firms have different capital structures, unlevered beta is calculated to remove additional risk from debt in order to view pure business risk.

1. You start by subtracting the risk-free rate of return from both the security in question and the benchmark.
2. Second, investors are interested in the best forecast of the true prevailing beta most indicative of the most likely future beta realization and not in the historical market-beta.
3. Beta represents the slope of the line through a regression of data points.
4. When the regression is conducted, an R2 statistic (coefficient of determination) is computed.
5. The arbitrage pricing theory (APT) has multiple factors in its model and thus requires multiple betas.
6. If alpha-emitters are inhaled, swallowed, or get into the body through a cut, the alpha particles can damage sensitive living tissue.

So a stock with beta of 2 could double in value over the course of a year, or it could lose half its value. If you’re looking for stability, a negative beta might not be what you’re looking for. On the other hand, if you’re looking for a stock that will go up when the market goes down, a negative beta might be right for you.

In the 2024 first quarter, Biogen reported GAAP earnings-per-share growth of 1% and adjusted EPS growth of 8% year-over-year. First quarter revenue came to $2.3 billion, down 7% year-over-year. Note that some stocks may or may not be in the S&P 500 index, but the other examples are not. Amanda Bellucco-Chatham is an editor, writer, and fact-checker with years of experience researching personal finance topics. Specialties include general financial planning, career development, lending, retirement, tax preparation, and credit. Alphabet (GOOGL), the parent company of Google, has a 1.13 beta value.

Beta Values

First, the underlying market betas are known to move over time. Second, investors are interested in the best forecast of the true prevailing beta most indicative of the most likely future beta realization and not in the historical market-beta. The arbitrage pricing theory (APT) has multiple factors in its model and thus requires multiple betas. Essentially, beta expresses the trade-off between minimizing risk and maximizing return. On the other hand, if the market declines 6%, investors in that company can expect a loss of 12%.

Beta measures the contribution of an individual investment to the risk of the market portfolio that was not reduced by diversification. It does not measure the risk when an investment is held on a stand-alone basis. Volatility is a measure of how much a stock’s price moves up and down. Beta also measures how much a stock’s price moves as it relates to the overall market. Ionizing radiation has so much energy it can knock electrons out of atoms, a process known as ionization. Ionizing radiation can affect the atoms in living things, so it poses a health risk by damaging tissue and DNA in genes.

Beta of 1.00 means that the security in question should move virtually in lockstep with the benchmark (as discussed briefly in the introduction of this article). Given this relatively small outperformance during good times and vast underperformance during weak periods, it is easy to see why we prefer low Beta stocks. Evidence suggests that during good years for the market, high Beta names capture 138% of the market’s total returns. An index that represents all of the market is a CAPM assumption, but in reality $m$ is typically some stock index can beta be negative (like the S&P 500, which represent U.S. large cap stocks). It’s not practical to build an index that would include all possible aset classes (stocks, bonds, FX, real estate…). A “good” beta value depends on your investment goals and tolerance for risk.

X-rays can be produced naturally or by machines using electricity. When the regression is conducted, an R2 statistic (coefficient of determination) is computed. One can interpret R² as the percentage of variance in the outcome variable explained by the set of predictor variables.

Is Beta a Helpful Measure for Long Term Investments?

Radioactive decay is the emission of energy in the form of ionizing radiationionizing radiationRadiation with so much energy it can knock electrons out of atoms. Ionizing radiation can affect the atoms in living things, so it poses a health risk by damaging tissue and DNA in genes.. The ionizing radiation that is emitted can include alpha particlesalpha particlesA form of particulate ionizing radiation made up of two neutrons and two protons.

Reena Fernandes