Just when I thought I understood BETA...

Discussion in 'Trading' started by eldorado1, Jan 23, 2012.

  1. Just when I thought I understood BETA, NFLX comes along with these numbers:

    Google Finance: Beta 0.48
    Yahoo Finance: Beta 0.09 (!?)
    thinkorswim: Beta 0.47

    Now, I guess they all make the measure according to different time periods but how can it be they are all so low?

    the same with SLV


    http://www.google.com/finance?q=nflx
    http://finance.yahoo.com/q?s=nflx&ql=1

    Thanks:)
     
  2. Bloomberg has a daily 2 year beta of .9

    Perhaps NFLX with all it's idiosyncratic issues isn't very correlated with the market.

    For contrast, BAC has a beta of 2.1 which makes sense as it's levered to all the crisis and economy issues.
     
  3. taowave

    taowave

    I always try to dumb down all these mathematical formulas.So,in the case of beta,I look it as

    correlation x the ratio of the standard deviations (of the asset vs index)

    without looking,my guess is the correlation of those stocks is very low to the respective index


     
  4. So far from what i checked Nasdaq.com is closest to reallity - 1.76 (but still far too modest number)

    I am not thinking of trading nutty stocks like NFLX but I need data I can trust (for a 2 month lookout)
     
  5. Why don't you calculate it yourself if those calculations are unacceptable to you?
     
  6. That is an incorrect defintion.

    Correlation x times covariance x,y over the variance of x.

    Covariance is much different than just the standard deviations ratio.