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square root of variance
most common measure of dispersion because of its ease of interpretation, relative to variance |
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| Frequency distribution presented as a bar chart, number of observations on Y axis and intervals on the X axis |
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| Shows the extent to which the fluctuations in one variable are similar to those of another. Shows strength AND direction. |
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| To express this relationship, we use the correlation coefficient. It can lie between -1 and +1 |
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- Sensitivity of a company to a benchmark (market)
- Beta of zero means that it is independent of market returns
- **Positive beta means that the stock generally follows the market return (if market is up, the stock will be up as well)
- Negative beta means they move in opposite directions (market is up, stock is down)
- Most betas are positive and investors tend to focus on whether beta is LESS or GREATER than 1
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IF R Squared is high that’s good, low not so good. Ranges from 0-1, 0 being a poor fit, and 1 being a good fit. Unlike correlation, R-squared shows strength but not direction. |
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