Securing Hannav Ledger...
Securing Hannav Ledger...
Glossary
Beta measures how sensitively an investment's returns move relative to a benchmark index, indicating market risk exposure.
Beta near 1 means the fund moves with the market. Beta above 1 is more volatile; below 1 is less volatile than the benchmark.
Beta is the slope of regression of fund returns on benchmark returns. A beta of 1.2 implies the fund tends to rise or fall 20% more than the index in directional moves, though not perfectly linear.
A mid-cap fund with beta 1.3 might fall 13% when the benchmark drops 10%, and rise 15.6% when the benchmark gains 12%.
Beta = Covariance(Fund, Benchmark) ÷ Variance(Benchmark)Conservative investors often prefer beta below 1 through debt funds, hybrid funds, or large-cap equity with lower market sensitivity.
Rarely, some hedged or inverse strategies show negative beta, meaning they move opposite to the benchmark on average.
Beta measures sensitivity, not expected return. Higher beta implies higher market risk, not guaranteed higher profits.