This also computes a covariance of returns between any the stocks and the market value where they have positive covariance, and those that move in opposite directions will have negative covariance. The expected return and variance of several stocks, a portfolio of these stocks that has a desired variance (risk) with a certain expected return. The expected return is the measurement of investment risk, what variances can be expected by the amount of investment. CAPM formula. The CAPM formula is:
Beta is the overall risk in investing in a large market, like the New York Stock Exchange Beta is the R-squared statistic found in the regression analysis. The Beta of a Strident Marks is risk compared to the Beta (Risk) of the overall market. Beta indicates the volatility of the security, relative to the asset class (Frontline Systems, Inc. 2006).
In conclusion, the Beta statistic defined by R-Square is positive 1 in the Market analysis, and 0.004 in the Stock analysis, it can be assumed, provided that the stock and market follow a normal distribution, that the stock holds a 40% greater risk than that market ...Show more