beta

1. A measure of the degree to which the *returns on a *security track the rest of a market. A beta coefficient is a measurement of the volatility of a * security’s *systematic risk, which under *portfolio theory cannot be reduced through *diversification. A beta of one suggests that a security’s returns follow the movements of the rest of the market, and that it therefore has an average risk. A beta of more than one indicates that a security moves in the same direction as a market, but to a greater degree. A beta of less than one denotes that a security moves in the same direction as a market, but is less responsive than the market as a whole. A negative beta indicates that a security’s returns follow a market inversely. 2. The second letter of the Greek alphabet, used extensively in statistics and financial economics.