Beta Estimation Finance
Beta Estimation in Finance
Beta is a crucial measure in finance that quantifies the systematic risk of an asset, typically a stock or a portfolio, relative to the overall market. It essentially reflects the asset’s volatility compared to the market’s volatility. A beta of 1 indicates that the asset’s price tends to move in the same direction and magnitude as the market. A beta greater than 1 suggests that the asset is more volatile than the market, while a beta less than 1 indicates lower volatility.