What is 'Beta Risk'
Beta risk is the probability that a false null hypothesis will be accepted by a statistical test. This is also known as a Type II error. The primary determinant of the amount of beta risk is the sample size used for the test. The larger the sample tested, the lower the beta risk becomes.
BREAKING DOWN 'Beta Risk'
An interesting application of hypothesis testing in finance can be done using the Altman Zscore. The Zscore is a statistical model meant to predict the future bankruptcy of firms based on certain financial indicators. Statistical tests of the accuracy of the ZScore have indicated relatively high accuracy, predicting bankruptcy within one year. These tests showed a beta risk (firms predicted to go bankrupt but did not) ranging from approximately 15 to 20%, depending on the sample being tested.

Alpha Risk
The risk in a statistical test that a null hypothesis will be ... 
Type II Error
A statistical term used within the context of hypothesis testing ... 
Hypothesis Testing
A process by which an analyst tests a statistical hypothesis. ... 
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High Beta Index
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International Beta
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Investing
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Beta: Gauging Price Fluctuations
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Investing
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In statistics, a null hypothesis is assumed true until proven otherwise. 
Investing
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Learn how the bet against beta strategy is used by a large hedge fund to profit from a pricing anomaly in the stock market caused by high stock prices. 
Investing
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Investing
How To Calculate Beta Of A Private Company
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Investing
What is a Security Market Line?
The security market line graphs the systematic risk versus return of the whole market at a certain time, and shows all risky marketable securities. 
Financial Advisor
Calculating Beta: Portfolio Math For The Average Investor
Beta is a useful tool for calculating risk, but the formulas provided online aren't specific to you. Learn how to make your own.

How does beta measure a stock's market risk?
Learn how beta is used to measure risk versus the stock market, and understand how it is calculated and used in the capital ... Read Answer >> 
How is the Altman ZScore used in fundamental analysis?
Learn about the Altman Zscore, how it is calculated and how to interpret the Altman Zscore to assess the viability of a ... Read Answer >> 
What does a ZScore tell a stock analyst about the health of a company?
Learn about the Altman Zscore, what the Zscore measures and what it indicates to an analyst about the health of a company. Read Answer >> 
What does a strong null hypothesis mean?
Find out what null hypothesis is and why it is important to the scientific method. See how statisticians and economists use ... Read Answer >> 
What is the relationship between confidence inferrals and a null hypothesis?
Learn about the relationship between confidence intervals and the null hypothesis in scientific research and empirical experimentation. Read Answer >> 
How does my insurance company determine what premiums I have to pay for coverage?
Learn about some of the quantitative finance measures that investors without a strong math background can use in analyzing ... Read Answer >>