Daily Archives: Nov 24, 2020 at 07:46 am EST

Beta Is A Useful Risk Metric—If You Use It Correctly

In a world awash in identified risk factors, the original quantitative profile of investment risk long ago fell from grace. If you spend ten minutes on the internet searching for research that finds beta to be irrelevant, at best, you’ll quickly line up reading material for a month. But the majority of the criticism focuses on beta’s weakness for parsing individual stocks. By that standard, beta suffers several well-known and reportedly fatal flaws as a risk measure. But applied to asset classes in the context of portfolio design and management, beta’s far from dead.

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Macro Briefing: 24 November 2020

Key gov’t agency (finally) recognizes Biden’s win: CNN
Biden selects former Fed chief Yellen as Treasury Sec: WSJ
Eurozone falls back into recession in November, survey data shows: IHSM
German business sentiment falls again, suggesting Q4 economic decline: RTRS
Chicago Fed president: expects rates to stay near zero through 2024: RTRS
Bitcoin above $19,000 for first time since 2017: BBG
US economic growth accelerated in Oct via Chicago Fed index: CF
US PMI survey data: “recovery gains further momentum” in November: IHSM