Beta measures the returns that a security has provided when compared to the returns from the stock market. It is also known as the measure of systematic risk or volatility of a security or a portfolio. Sometimes Beta is also known from the name of beta coefficient.

In addition to this, Beta is also used in Capital Asset Pricing Model to assess the expected returns from an asset. Beta tells how much change in security price or values takes place when the market index changes.

Beta Formula

Beta = Cov [R(s), R(m)] / Var R(m)

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