What is Beta (finance)?
'''Beta''' is a financial measurement of an assets' sensitivity to a certain weight. Typically, this weight is the [[S&P 500]].<ref>{{Cite web|title=Beta|url=https://www.investopedia.com/terms/b/beta.asp|access-date=2022-04-23|website=Investopedia|language=en}}</ref> Beta uses past performance, and cannot predict future results. == Examples == * [[Rio Tinto]] has a beta of 0.55 (On [[New York Stock Exchange|NYSE]]), meaning that if the S&P 500 moves up 20%, theoretically, Rio Tinto moves up 11%. * The [[:en:Tuttle_Capital_Short_Innovation_ETF|SARK]] [[Exchange traded fund|ETF]] has a beta of -2. If the market drops by 6%, SARK may go up 12%. == Formula == Beta is calculated by dividing the [[covariance]] of returns between the index, and the stock, to the [[variance]] for the index returns.<ref>{{Cite web|title=Beta Coefficient|url=https://corporatefinanceinstitute.com/resources/knowledge/finance/beta-coefficient/|access-date=2022-04-23|website=Corporate Finance Institute|language=en-US}}</ref> ==References== {{reflist}} [[Category:Finance]]