Tag: Beta

Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which calculates the expected return of an asset based on its volatility and market risk. Beta allows investors to make better decisions by quantifying the risk of a security relative to the risk of the asset class or index it belongs to. By watching a security’s beta, investors can make more informed investment decisions.

Formula

Portfolio Beta Formula: Learn the Basics of Forex Trading

By Matthew M. Lockett
August 25, 2023

4 min read

Portfolio Beta is a metric used by Forex traders to measure the impact a single trade has on the overall investment portfolio. It measures the correlation between any given trade’s returns and the total portfolio’s returns. A Beta of 1.0 indicates that the trade is perfectly correlated with the total portfolio’s returns, while lower or higher values indicate a higher or lower correlation. Portfolio Beta is a powerful tool for traders to assess the overall risk level of a given trade and to optimize their trading strategies.