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For individual stocks, though, negative betas are fairly rare. But out of curiosity, I turned up some of the few negative-beta stocks out there. Here's a quick look. Arena Pharmaceuticals , beta ...
For example, if the stock market went up by 20% in a given year, and a manager had a portfolio with a market-beta of 2.0, this portfolio should have returned 40% in the absence of specific stock picking skills. This is measured by the alpha in the market-model, holding beta constant. Occasionally, other betas than market-betas are used.
Using beta to evaluate a stock’s risk. Beta allows for a good comparison between an individual stock and a market-tracking index fund, but it doesn’t offer a complete portrait of a stock’s ...
Or perhaps you are looking for stocks with little market volatility in the midst of financial uncertainty. Either way, the following list of low beta stocks with institutional buying should pique your
It's typically the highly volatile stocks that catch our attention, jumping and dropping sharply over time. We often think they may serve us best, too, as they seem to have the potential to give ...
An example is a stock in a big technology company. Negative betas are possible for investments that tend to go down when the market goes up, and vice versa. There are few fundamental investments with consistent and significant negative betas, but some derivatives like equity put options can have large negative beta values. [6] Investments with ...
This is an example of a stock market anomaly since it contradicts the central prediction of many financial theories that higher returns can only be achieved by taking more risk. The capital asset pricing model (CAPM) predicts a positive and linear relation between the systematic risk exposure of a security (its beta) and its expected future return.
For example, if a stock tends to show varying returns that are 50% greater than the movements of the overall market, that stock will have a beta of 1.5. The overall market has a beta of 1.0, as it ...