What Happens If Beta Is Negative?

What happens if beta is negative? A negative beta correlation means an investment moves in the opposite direction from the stock market. When the market rises, a negative-beta investment generally falls. When the market falls, the negative-beta investment will tend to rise.

Is negative beta rare?

It is rare to see a negative BETA stock. Most stocks move with the market, hence the expression "a rising tide lifts all boats." Negative BETA stocks are an anomaly.

What companies have a negative beta?

Negative Beta Stocks

Company Current Price Average Volume
KOSS Koss $13.30 -2.2% 2.33 million
GME GameStop $161.89 -6.8% 15.12 million
CNTG Centogene $6.06 +1.0% 53,581
RBOT Vicarious Surgical $10.90 +0.9% 384,289

Can a risky asset have a negative beta?

Yes. It is possible, in theory, to construct a zero beta portfolio of risky assets whose return would be equal to the risk-free rate. It is also possible to have a negative beta; the return would be less than the risk-free rate.

What is an example of a negative beta?

A standard example that is offered for a negative beta investment is gold, which acts as a hedge against higher inflation (which devastates financial investments such as stocks and bonds). It is also true that puts on stocks and selling forward contracts against indices will have negative betas.


Related investments for What Happens If Beta Is Negative?


What does a negative beta value mean in regression?

In regression analysis, the beta coefficient represents the change in the outcome variable for a unit change in the independent or predictor variable. A negative beta coefficient indicates the decrease in the dependent variable for a unit change in the independent variable.


What does negative alpha mean?

A positive alpha indicates the security is outperforming the market. Conversely, a negative alpha indicates the security fails to generate returns at the same rate as the broader sector. So, according to this definition, a stock with a negative alpha is underperforming.


Should a negative beta asset offer a higher or a lower expected rate of return than the risk-free asset?

If risky assets have a negative beta portfolio, then the return would be less than the risk-free rate. If risky assets have a positive beta portfolio, then return would be more than risk-free rate.


Can you have a negative market risk premium?

If the estimated rate of return on the investment is less than the risk-free rate, then the result is a negative risk premium.


Is AMC negative beta?

Despite being rare, a stock may have a negative beta, which means the stock moves opposite the general market trend. AMC Entertainment Holdings Inc. shows a Beta of -9.60.

Beta (Ref: DJIA)

Levered beta Unlevered beta
3-Year 0.34 0.25

Can you have negative beta in CAPM?

Interpret the CAPM, II

When the covariance is negative, the beta is negative and the expected return is lower than the risk-free rate. A negative-beta asset requires an unusually low expected return because when it is added to a well-diversified portfolio, it reduces the overall portfolio risk.


Is beta statistically significant?

What is a Beta Level? A beta level, usually just called beta(β), is the opposite; the probability of of accepting the null hypothesis when it's false. You can also think of beta as the incorrect conclusion that there is no statistical significance (if there was, you would have rejected the null).


How do you interpret regression results?

The sign of a regression coefficient tells you whether there is a positive or negative correlation between each independent variable and the dependent variable. A positive coefficient indicates that as the value of the independent variable increases, the mean of the dependent variable also tends to increase.


What does a .5 beta mean?

And there are three possible categories a stock can be in, based on its beta. A stock with a beta less than one tends to be less volatile than the overall index. For example, a beta of 0.5 implies that a stock's movements will theoretically be about 50% of the index's movements.


What is the beta male?

Alpha male and beta male, or simply alpha and beta, are slang terms for men derived from the designation for alpha and beta animals in ethology. The term alpha male is often incorrectly applied to any dominating man, especially bullies. Both terms have been frequently used in the manosphere.


What does a negative Cronbach's alpha mean?

A negative Cronbach's alpha indicates inconsistent coding (see assumptions) or a mixture of items measuring different dimensions, leading to negative inter-item correlations. A negative correlation indicates the need to recode the item in the opposite direction.


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