Thursday, May 18, 2017

Beta Ratings

I have recently looked at the Beta Ratings for my stocks and for the stocks that I follow. Basically, if a stock has a beta rating of 1 it means that it moves with the market. If the beta is less than 1 then stocks price is theoretically less volatility than the market. If the Beta is higher than 1 that indicates that the stock price is theoretically more volatile than the market. See my spreadsheet here .

If a stock has a Beta of 1 it means that is an average risk. A Beta of 0 means the stock has zero risk. In the stocks I cover some have a negative Beta. With a negative risk you could expect less than a risk free return. A stock with a negative Beta would act like a hedge. They move in the opposite way of the market.

When I look at the Beta Ratings for the stocks I own the median Beta is 0.79, the highest is 2.14 which is Barrick Gold Corp. (TSX-ABX, NYSE-ABX) and the lowest is 0.01, which is Metro Inc. (TSX-MRU, OTC-MTRAF).

Category Beta
Median 0.80
Highest 2.14
Lowest 0.01

The stocks that I follow, including mine, the median is 0.74, the highest is 4.18, which is Penn West Petroleum (TSX-PWT, NYSE-PWE) and the lowest is -0.65 which is Alimentation Couche-Tard (TSX-ATD.B, OTC-ANCUF).

Category Beta
Median 0.74
Highest 4.18
Lowest -0.65

A good place for information about stock betas is Investopedia. On his blog Aswath Damodaran talks about the implications of negative Beta Ratings. Dan Caplinger on Motley Fool talks about negative Beta Rating stocks. There is also a good discussion about this subject by Pat McKeough On TSI Wealth Daily Advice.

On my other blog I wrote yesterday about Hammond Power Solutions Inc. (TSX-HPS, OTC- HMDPF)... learn more. Tomorrow, I will write about be Canadian Utilities Ltd (TSX-CU, OTC-CDUAF)... learn more on Friday, May 19, 2017 around 5 pm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

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