82,891
edits
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) No edit summary |
||
Line 3: | Line 3: | ||
Defined in a famous paper by William Sharpe in 1964 — he of the [[Sharpe ratio]] — [[beta]] is defined as | Defined in a famous paper by William Sharpe in 1964 — he of the [[Sharpe ratio]] — [[beta]] is defined as | ||
“a portfolio risk that cannot be diversified away by adding more securities to it.” | {{box|“a portfolio risk that cannot be diversified away by adding more securities to it.” }} | ||
Since the whole market has all the securities in it, you can’t add to that, the whole market has a beta of 1. Therefore to track [[beta]] is to track the whole market’s performance. | Since the whole market has all the securities in it, you can’t add to that, the whole market has a beta of 1. Therefore to track [[beta]] is to track the whole market’s performance. |