Beta is the slope of the regression line. Beta measures the risk of a particular investment relative to the market as a whole (the “market” can be any index or investment you specify)*. It describes the sensitivity of the investment to broad market movements. For example, in equities, the stock market (the independent variable) is assigned a beta of 1.0. An investment which has a beta of 0.5 will tend to participate in broad market moves, but only half as much as the market as a whole.
ra is the return of the asset
rb is return of the benchmark
Can be calculated for different time periods: 3 months – 10 years.
The statistic cannot be calculated if benchmark data for the same time period are not available.
* Program´s data in relation to the first program´s benchmark