Beta Risk

Filed Under »
Dictionary Says

Definition of 'Beta Risk'

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.
Investopedia Says

Investopedia explains 'Beta Risk'

An interesting application of hypothesis testing in finance can be done using the Altman Z-score. The Z-score is a statistical model meant to predict the future bankruptcy of firms based on certain financial indicators. Statistical tests of the accuracy of the Z-Score 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.

Related Definitions

Search results for

'Beta Risk'

  • Measuring And Managing Investment Risk

    http://www.investopedia.com/articles/08/risk.asp
    ... The difference in pricing between passive and active strategies (or beta risk and
    alpha risk respectively) encourages many investors to try and separate these ...

  • Beta: Know The Risk

    http://www.investopedia.com/articles/stocks/04/113004.asp
    Beta says something about price risk, but how much does it say about
    fundamental risk factors? ... Beta: Know The Risk. November 30 2004 ...

  • Bettering Your Portfolio With Alpha And Beta

    http://www.investopedia.com/articles/07/alphabeta.asp
    ... Alpha and beta expose portfolios to idiosyncratic risk and systematic risk,
    respectively; however, this is not necessarily a negative thing. ...

  • 4 Low Risk Stocks On The S&P

    http://stocks.investopedia.com/stock-analysis/2012/4-Low-Risk-Stocks-On-The-SP-ABT-AZO-COST-GWW-HSY0109.aspx
    ... (To learn the basics of beta, read Beta: Know The Risk.) Use the Investopedia Stock
    Simulator to trade the stocks mentioned in this stock analysis, risk free! ...

  • Reduce Your Risk With ICAPM

    http://www.investopedia.com/articles/financial-theory/09/ICAPM-and-CAPM.asp
    ... For example, since research appeared which showed that small cap stocks outperform
    large caps, even after adjusting for beta risk, many small cap funds have ...

  • 5 Low Risk Stocks On The S&P

    http://stocks.investopedia.com/stock-analysis/2011/5-Low-Risk-Stocks-On-The-SP-ABT-AZO-COST-GWW-HSY0809.aspx
    ... (To learn the basics of beta, read Beta: Know The Risk.) Use the Investopedia Stock
    Simulator to trade the stocks mentioned in this stock analysis, risk free! ...

  • Calculating Beta: Portfolio Math For The Average Investor

    http://www.investopedia.com/articles/financial-theory/09/calculating-beta.asp
    ... squared. This is a powerful tool that can gauge how well your beta measures
    risk. The range of this statistic is from one to zero. ...

  • 5 Ways To Measure Mutual Fund Risk

    http://www.investopedia.com/articles/mutualfund/112002.asp
    ... and fund portfolios with low betas, whereas those investors willing to take on more
    risk in search of higher returns should look for high beta investments. ...

  • 5 Low Risk Stocks On The S&P

    http://stocks.investopedia.com/stock-analysis/2011/5-Low-Risk-Stocks-On-The-SP-ABT-AZO-COST-GWW-HSY0412.aspx
    ... (To learn the basics of beta, read Beta: Know The Risk.) Use the Investopedia Stock
    Simulator to trade the stocks mentioned in this stock analysis, risk free! ...

  • Beta: Gauging Price Fluctuations

    http://www.investopedia.com/articles/01/102401.asp
    ... 10% would mean a 5% gain for the company. (For further reading, see Beta:
    Know The Risk.) Here is a basic guide to various betas: ...

Related Articles

Partner Links