rhizoverbBeta
DictionarybetaMarket sensitivity
noun

beta

A measure of how an investment's returns move relative to the market.

The analyst estimates the stock's beta relative to the market index.

Etymology
betaGreeksecond letter of the alphabet

The name is the second Greek letter, used as a mathematical symbol for a coefficient. In finance, that coefficient measures an investment’s sensitivity to movements in the market.

More examples

  • A beta above one indicates greater sensitivity in that model.
  • The portfolio's beta changed after the sale.
  • Their calculation used five years of returns to estimate beta.

Forms

beta