2006-07-17 14:30:44 · 3 answers · asked by cani 2 in Business & Finance ➔ Investing
it means that your investment will not follow what the market does...stocks have beta. If the stock Beta's is 1.0 it follows generally what the market does, if its less than one then its a non-correlational investment.
2006-07-17 14:43:07 · answer #1 · answered by 6 · 0⤊ 0⤋
Dfresh is partially correct.
Beta is a measure of how the returns on one particular investment correlates with the general market - usually defined as the S&P 500 index. IBM stock may move somewhat closely with the market thus the returns on IBM stock and the general market are somewhat correlated.
If two investments are NON-correlated, then their returns are unrelated. When the returns on one investment go up, the returns on the other investment could go up, down or stay the same. In other words the returns are unrelated.
2006-07-17 14:52:48 · answer #2 · answered by insuranceguytx 5 · 0⤊ 0⤋
insuranceguytx is only partially correct about Beta. Beta is a standardized measure of systematic risk. It shows the relationship of the risk(Variance) of the stock and the market, not the returns between the stock and the market.
2006-07-17 15:49:33 · answer #3 · answered by The Time 2 · 0⤊ 0⤋