How to Interpret the Beta of a Stock

Рет қаралды 62,936

8 жыл бұрын

This video shows how to interpret the beta of a stock. Examples of beta from actual firms are presented and interpreted. Firms with a beta greater than one have higher systematic risk than average, whereas firms with a beta less than one have less systematic risk than average. To understand why firms have different levels of systematic risk, consider the following: a grocery store will likely have a beta less than one because in the event of a market downturn people are likely to continue buying food. A company that sells high-end jewelry, however, is likely to have a beta higher than one; when times are good people are eager to purchase luxury goods, but when times are bad people drastically reduce such purchases. If a firm were to have a beta of zero, this would mean that the firm bears no systematic risk; the firm's return is not affected by the return of the market portfolio at all. It is possible for a firm to have a negative beta, although it is rare. This would occur if the firm does very well when the market portfolio does poorly; investing in such a firm would effectively provide insurance against a market downturn. This explains why an investor might choose to invest in such a firm, even though the firm has a return that is less than the risk-free rate according to the Capital Asset Pricing Model.
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Пікірлер: 47

@maxanaterdog 7 жыл бұрын

Thank you for this video! It made interpreting the beta values much clearer for me:)

@usmanashraf9079 Жыл бұрын

I have a deep sense of gratitude for you and your channel.Thanks for providing such amazing content.

@raminalibeyli9243 4 жыл бұрын

Really, you are amazing teacher. You explain more more better than my teachers. Thank you

@gacemamine5970 7 жыл бұрын

Thank you very much Sir and God bless you.

@olivejess8957 4 жыл бұрын

Investing in stocks will always have its risks attached to it, the main goal i guess should involve finding a way to drastically minimize the loses to maximize profit returns

@natalyak.134 4 жыл бұрын

I got into the stock market some months back and i really messed things up because i haven't really gained full knowledge on how the market works

@leduong5459 4 жыл бұрын

Investing has its risks but i think not investing has some more risks

@timyoon733 4 жыл бұрын

@@leduong5459 I get your point

@nevilleoscar6613 4 жыл бұрын

Been trying to make some investment but when i remember i just have a little experience and that could be dangerous i just change my mind. Don't want to lose my hard earned money

@olivejess8957 4 жыл бұрын

@@nevilleoscar6613 That's a smart decision but i suggest getting help from someone with a lot more experience would be great

@abdullafaizov7963 6 жыл бұрын

Your explanations are amazing. You are a great teacher. Thank you for the video, now everything makes more sense)

@Edspira 6 жыл бұрын

Awesome!

@younasha8686 3 жыл бұрын

thank you, simple example and make things clear

@mirjakhon 4 жыл бұрын

Thanks. Very interpretive.

@kiroooooooous7492 3 жыл бұрын

Here after gme -8% negative beta. Thanks for explaining.

@raymondagyenkwa3088 5 жыл бұрын

Good explanation done

@kaneishajohnson8826 4 жыл бұрын

You’re an amazing teacher thank you so much 👏🏾❤️

@user-ew1nu2wd9h 2 жыл бұрын

Thank you very much. I feel like you are a life-saver for me. Thanks!

@Edspira 2 жыл бұрын

Glad to hear that!

@prazushrestha9917 6 жыл бұрын

Why we calculate beta using covariance of security with market

@togggn 4 жыл бұрын

Thank you so much

@dalalqutt-5143 5 жыл бұрын

Thank you👍

@jg3040 5 жыл бұрын

How would you get the raw data to use to get the beta for a stock?

@Yadobler 2 жыл бұрын

Hello, could I ask if there's like a link to the price elasticity of demand of goods of a firm, and its corresponding beta. Just curious though I don't know what I would do with that knowledge. Thanks!

@Brosephv 3 жыл бұрын

what could cause a stock's beta to be negative? I understand it means that the stock goes against the market, but what could cause a stock to go against the market?

@Crowscendo 5 жыл бұрын

how fid you find the beta of a company??

@bestlyrics4308 3 жыл бұрын

hi, how can I calculate the Beta of a middle scale start-up?

@sydbarnes9006 5 жыл бұрын

What would the Beta of the oil Companies be?

@nandubijunair4255 Жыл бұрын

If the Beta is negative, does it mean that it is wise to short the asset in a bullish market and vice versa?

@filippoiguera3224 3 жыл бұрын

Update: Alcoa has a BETA of 2.30 now It changed a lot

@venti7669 3 жыл бұрын

Press F for Alcoa

@zenapsgas 6 жыл бұрын

What software are you using?

@Edspira 6 жыл бұрын

Camtasia Studio, SmoothDraw, and a Wacon Bamboo tablet.

@MrJackhandy369 7 жыл бұрын

what if something is -1.8 or - something?

@johndowney6923 6 жыл бұрын

It would mean that given a positive 1% change in the market portfolio the company would experience a negative 1.8% change. This would be very rare and unrealistic but possible as far as the math goes. Let me clarify I currently have a C+ in Business Finance but I believe my response to be correct.

@johndowney6923 6 жыл бұрын

kzfaq.info/get/bejne/qb-la6hp0NCnhGQ.html watch the video before this one and pay attention