{"id":45296,"date":"2023-06-22T15:08:15","date_gmt":"2023-06-22T13:08:15","guid":{"rendered":"https:\/\/staging.captrader.com\/glossar\/beta-einer-aktie\/"},"modified":"2024-03-24T15:07:22","modified_gmt":"2024-03-24T14:07:22","slug":"beta-of-a-stock","status":"publish","type":"glossar","link":"https:\/\/www.captrader.com\/en\/glossar\/beta-einer-aktie\/","title":{"rendered":"Beta of a share"},"content":{"rendered":"

The beta of a share describes how closely a security follows the performance of the market (or benchmark). Investors can use the beta factor to better assess the risk of an investment. Here you can find out what the beta factor of shares means, how you can calculate it and why it helps to assess shares and funds. <\/p>\n\n\n\n

What is the beta of a share?<\/h2>\n\n\n\n

The beta of a share (also: beta factor of shares) describes how strongly the price of a security depends on a comparative value. A look at the beta of shares shows us whether the security is developing in the same way as the benchmark market\/index, outperforming its changes or fluctuating less. This is also referred to as the \"sensitivity of securities\". <\/p>\n\n\n\n

The beta value is used particularly frequently for shares and funds. It is also used for ETFs<\/a> it is an important indicator. It usually refers to the respective index that an ETF replicates or the benchmark of a fund. In the case of shares, reference to both the index (e.g. DAX, NASDAQ, etc.) and the overall market is common. However, assets can generally also be compared with another asset. <\/p>\n\n\n\n

In addition to the beta for individual shares and other investment products, it is also possible to calculate the beta for your own portfolio. This shows how strong or weak the movements of our investments were compared to the selected benchmark. <\/p>\n\n\n\n

If the beta of a share is exactly 1, the security exactly reflects the respective benchmark. In practice, this would mean that if the benchmark index falls by 10 %, the share price also falls by 10 %. If, on the other hand, it rises by 13.27 %, the share price also rises by 13.27 %. <\/p>\n\n\n\n

A beta of the share of less than 1, on the other hand, indicates a disproportionately low reaction: The security follows the performance of the benchmark only to a lesser extent. For example, the benchmark index could rise by 10 %, but the share whose beta factor we calculate would only rise by 5 %. Conversely, it would also be possible for the index to fall by 10 %, for example, but the share in question would only lose 3 % in value. The lower the beta of the respective share, the more pronounced the difference. <\/p>\n\n\n\n

However, if the beta of the share is greater than 1, the performance of the benchmark is replicated disproportionately. A rather small change of +5 %, for example, would be offset by a large change of +12 % for our share. A loss of 10 % for the benchmark could result in -15 % for our security. The higher the beta value, the more extreme the differences.\u00a0<\/p>\n\n\n\n

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If the beta of an asset were zero, it would be completely risk-free. This is particularly the case if an investment has no market exposure or is considered to be completely risk-free. The beta of shares can never be zero due to the ever-present risk. However, government bonds with an AAA rating are generally considered to have a beta of zero, as there is no risk for the investor. <\/p>\n\n\n\n

A negative beta is also possible if the performance of a share or other asset moves in the opposite direction to the benchmark. Investments that benefit from bear markets and falling prices or lose value when markets rise fall into this category.  <\/p>\n\n\n\n

Beta for shares - meaning and practical application<\/h2>\n\n\n\n

The beta of shares, funds or your own portfolio can be used primarily to determine the market risk (\"systemic risk\") of investments. If our investments have a particularly high beta, they are very likely to cause drastic losses in the next crisis. In times of upswing, however, they are also likely to perform above average. <\/p>\n\n\n\n

A higher beta of a share is therefore associated with a higher risk. As the beta factor of shares can be looked up at any time, it is possible to set up your own portfolio according to your personal risk capacity. Shares, funds and the like that have a high beta can be specifically avoided in order to ensure greater security. Conversely, very risk-averse investors can of course also consciously buy stocks with a high beta. <\/p>\n\n\n\n

To determine the overall beta of a portfolio, it is usually sufficient to calculate a weighted average of the beta factors. New shares, funds and the like that an investor has in mind, as well as their influence on our portfolio, can also be estimated using the beta.<\/p>\n\n\n\n

Although the beta of shares and other products is an important indicator, its significance should not be overestimated. As future prices cannot be calculated, it is always an evaluation of historical data. An asset could therefore deviate from its previous performance at any time, regardless of how high or low its beta value has been to date. <\/p>\n\n\n\n

This is how we can calculate the beta factor <\/h2>\n\n\n\n

Calculating the beta factor is not easy, as the deviation must first be determined using the variance from the market return. The covariance is then formed from the stock return and the market return. As the covariance is not standardized, it must then be analyzed using the correlation coefficient.\u00a0\u00a0<\/p>\n\n\n\n

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In practice, it is therefore easier to check the beta of shares, funds and the like with the respective companies, fund operators or brokers (at CapTrader, for example, in the Trader Workstation TWS<\/a> under > Analysis tools and > Extended price quotation details). It is also advisable to use the freely available beta factors of your investments to determine the beta of your own portfolio. These can then be added up to an average value according to the percentage distribution of your assets. <\/p>\n\n\n\n

If you are dissatisfied with the risk of your portfolio, represented by the beta factor, you now have the opportunity to make adjustments. You can influence the beta of your portfolio through the targeted acquisition of assets with high or low beta. <\/p>","protected":false},"author":20,"featured_media":0,"template":"","class_list":["post-45296","glossar","type-glossar","status-publish","hentry"],"acf":{"blog_summary":"","blog_faq_schalter":"nein","faq_uberschrift":"","blog_faq_loop":null},"_links":{"self":[{"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/glossar\/45296","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/glossar"}],"about":[{"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/types\/glossar"}],"author":[{"embeddable":true,"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/users\/20"}],"wp:attachment":[{"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/media?parent=45296"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}