![]() ![]() ![]() ![]() Since the industry of finance gravitates towards return generating activities, typically the historical returns (percentage changes) are used in the calculations Beta values (among others). Conditional on the benchmark index, the resulting beta value can vary considerably (S&P500 vs NASDAQ vs ETF of a specific industry).īeta should not be confused with standard deviation (or the semi-variance, which considers only negative returns): the preferred measure of the "riskiness" (historical volatility of returns) of a financial asset or a portfolio in isolation.īeta can be calculated as the covariance of a financial asset (or portfolio) with its benchmark index, divided by the variance of the benchmark index. See also: Software release life cycle § Beta, and Alpha–beta pruning Finance īeta is used in finance as a measure of (historical pseudo-implied) financial asset sensitivity to the relevant benchmark index. ![]()
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