Cryptocurrency Q&A
Is beta the expected return?
Is beta the expected return?
Riccardo
Sun Aug 18 2024
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5 answers
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Excuse me, could you clarify something for me? I've come across the term 'beta' in relation to investments and cryptocurrency, and I'm wondering if it refers to the expected return of an asset? I understand that beta is a measure of volatility or risk in relation to the market, but I'm not sure if it directly correlates to the expected return. Could you explain the relationship between beta and expected return, if any?
5 answers
Giulia
Tue Aug 20 2024
Beta is a fundamental concept in finance that measures the sensitivity of a security's returns to changes in the overall market.
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Rosalia
Mon Aug 19 2024
It is a key component in the capital asset pricing model (CAPM), which is a widely used framework for estimating the expected return of an asset.
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CryptoAlchemy
Mon Aug 19 2024
Beta captures the systematic risk of an asset, which is the risk that cannot be diversified away through portfolio diversification.
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GeishaMelody
Mon Aug 19 2024
In other words, beta represents the extent to which an asset's returns are correlated with the returns of the overall market.
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Carlo
Mon Aug 19 2024
High-beta assets are considered more volatile and risky, as they tend to move more in response to market swings. On the other hand, low-beta assets are less sensitive to market movements and are generally considered less risky.
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