Beta
16
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6
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Search complete. 16 mentions across 6 episodes found for "Beta".
Oct 21, 2026
Aswath DamodaranHOST
This is not where I want to fight.
Aswath DamodaranHOST
So what I'm saying is don't let Betas become your battlefield.
Aswath DamodaranHOST
Don't argue with people about using betas.
Aswath DamodaranHOST
It's not worth the effort.
Aswath DamodaranHOST
Then try to make it into a scale measure and move on.
Aswath DamodaranHOST
But I'm going to take you back to what I think is a more healthy discussion of betas.
Aswath DamodaranHOST
Betas ultimately don't come from regressions.
Aswath DamodaranHOST
They don't come from Bloomberg.
Aswath DamodaranHOST
Because once you've got there, then it becomes a question of, how do I come up with a measure for that risk? The next time you use the word beta, I want you to remember all this baggage I've dragged along so far.
Aswath DamodaranHOST
Because when you measure the beta for a stock, what are you measuring? You're measuring how it moves with that market portfolio.
Aswath DamodaranHOST
Beta doesn't measure the risk in a stock.
Aswath DamodaranHOST
That's a misnomer.
Aswath DamodaranHOST
Beta doesn't measure volatility.
Aswath DamodaranHOST
It's got nothing to do with it.
Aswath DamodaranHOST
Beta measures risk added to a diversified portfolio.
Aswath DamodaranHOST
And the reason we're able to get away with that is by assuming the margin investor is diversified and therefore doesn't care about all that firm-specific risk.
Isaac OngHOST
So just in summary, in terms of alpha and beta, beta basically means diversifying across that market, the particular market.
Isaac OngHOST
There's a beta of one, right? That's perhaps the most sensible thing that most people should do.
Isaac OngHOST
And alpha is really trying to beat what Beta is giving investors.
Isaac OngHOST
But of course, with that, we have to consider things like risk and cost, which we will talk more about later.
Peng ChenGUEST
So if you compare the Beta and Alpha, we got into a little bit.
Peng ChenGUEST
Beta returns are associated with fundamental market, how the economy works.
Peng ChenGUEST
And like I mentioned, everybody can participate.
Peng ChenGUEST
So it's not like, okay, I couldn't buy this or I couldn't buy that.
Alan KringHOST
Now in your files in Canvas, go to files.
Alan KringHOST
By the way, Sigma and Beta should be about the same if we are talking about a very well-diversified portfolio.
Alan KringHOST
Because in a well-diversified portfolio, you've squeezed out all of the non-systematic risk.
Alan KringHOST
So the total risk is almost all non-diversifiable.
Alan KringHOST
So if I have a very large portfolio of companies, I can look at Sigma and that is just about the same as Beta.
Alan KringHOST
Okay, so let me pull over here.
Alan KringHOST
Spreadsheets, and I think it's in the top level folder.
Alan KringHOST
In other words, you should expect it to pay more than a stupid T-bill.
Alan KringHOST
Why would you invest it? And then the next part is interesting because you take that market premium over risk-free and you scale it by the beta of the stock or the portfolio.
Alan KringHOST
Beta is nothing but a magnifier or a demagnifier.
Alan KringHOST
That's all it is.
Alan KringHOST
So in other words, I've got those numbers over there.
Ran ChenHOST
Alpha, beta, and the Sharpe ratio are central risk-adjusted performance measures on the Series 66 exam.
Ran ChenHOST
To master these concepts for test day, investment advisor representatives must understand how each metric accounts for different types of risk and return.
Ran ChenHOST
Beta measures systematic risk, which is non-diversifiable market risk.
Ran ChenHOST
A benchmark index like the Standard & Poor's 500 has a beta of exactly 1.0. An equity portfolio with a beta of 1.2 is expected to be 20% more volatile than the broad market, moving up or down by 1.2 times any market move.
Ran ChenHOST
Conversely, a portfolio with a beta of 0.8 is 20% less volatile than the benchmark.
Ran ChenHOST
To keep these formulas clear on exam day, use this decision rule.
Ran ChenHOST
Alpha is actual minus expected return.
Ran ChenHOST
Beta is benchmark sensitivity.