Show the graph with the regression results. Point out that the beta is the slope
coeeficient, which is 0.83. State that an average stock, by definition, moves with the
market. Beta coefficients measure the relative volatility of a given stock relative to
the stock market. The average stock’s beta is 1.0. Most stocks have betas in the
range of 0.5 to 1.5. Theoretically, betas can be negative, but in the real world they are
generally positive.
In practice, 4 or 5 years of monthly data, with 60 observations, would generally
be used. Some analysts use 52 weeks of weekly data. Point out that the r2 of 0.36 is
slightly higher than the typical value of about 0.29. A portfolio would have an r2
greater than 0.9.
Show the graph with the regression results. Point out that the beta is the slopecoeeficient, which is 0.83. State that an average stock, by definition, moves with themarket. Beta coefficients measure the relative volatility of a given stock relative tothe stock market. The average stock’s beta is 1.0. Most stocks have betas in therange of 0.5 to 1.5. Theoretically, betas can be negative, but in the real world they aregenerally positive.In practice, 4 or 5 years of monthly data, with 60 observations, would generallybe used. Some analysts use 52 weeks of weekly data. Point out that the r2 of 0.36 isslightly higher than the typical value of about 0.29. A portfolio would have an r2greater than 0.9.
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