From the course: Excel for Investment Professionals

Unlock the full course today

Join today to access over 22,600 courses taught by industry experts or purchase this course individually.

Reviewing beta

Reviewing beta - Microsoft Excel Tutorial

From the course: Excel for Investment Professionals

Start my 1-month free trial

Reviewing beta

“

- [Instructor] One of the major types of analysis you will need to do on any portfolio involves examining risk and return of that portfolio. Defining these concepts can be tricky though. Risk in a portfolio starts with what we call beta. Beta is a measure of the systematic or market risk based on an asset's covariance with the market portfolio. What that means is beta measures how much a stock moves in sync with the overall stock market. Think about this in the context of an analogy or a metaphor. Let's imagine that we're swimming in the ocean. If we're tryin' to swim from the beach out towards the sea, if the tide is coming in, it's hard to swim out to sea. If the tide is going out, though, we're going to have a much easier time swimming in the ocean. Our relationship to the ocean is just like the relationship between a stock and the stock market overall. And that's measured by beta. If a stock has a beta greater than one, that means that that particular stock is more sensitive to…

Contents