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> One interesting thing to note from that chart is their Beta (a measure of link to market volatility) is less than 1, which is very low for a high tech stock.
by chollida1 13y ago
> One interesting thing to note from that chart is their Beta (a measure of link to market volatility) is less than 1, which is very low for a high tech stock.
Not really, Looking at my Bloomberg terminal shows that AAPL US Equity has a beta of .944, YHOO US Equity has a beta of .748 and GOGO US Equity has a beta of .894.
- mathattack 13y agoInteresting. I see IBM is less than 1 too. Facebook has a 3.29, LinkedIn is 1.81, Accenture is 1.4 and SAP is 1.5. Do you think this is based on revenue models? Size? The amount of cash on hand? Brand strength? Likelihood of needing to go to the public markets for money?
- zeckalpha 13y agoIt's drawn from a normal distribution.
- bernardom 13y agoI would hesitate to try to put a narrative-based explanation to it. As you pointed out, Beta is the correlation of a security's price history to the market's movement. Approximately half of any group of equities will have a correlation below 1 against the group's weighted average performance. If the group is large enough, its movement will closely mirror the market, so for a large enough group of equities (chosen randomly) about half will have correlation below 1, and half above. It merely means that Microsoft is reasonably closely tied to the market's movement, though slightly below. You compared it against its sector, technology. The tech sector has a higher average beta than the utilites sector. That's just the nature of the sector. Where it gets interesting is something like FB at 3.29. That's really high. But its price history is also short, having IPOd so recently... perhaps over time it will stabilize at a lower number.