Glossary
Beta
A measure of an asset's or strategy's sensitivity to overall market movements.
Beta quantifies how much a strategy moves relative to a benchmark. A beta of 1 means it moves with the market, while a beta of -0.5 means it tends to move in the opposite direction with half the magnitude. Beta helps assess market exposure and diversification.
Key Points
- Beta of 1 = same volatility and direction as the market.
- Low or negative beta strategies can reduce portfolio drawdowns.
- Beta can change across market regimes.