Master Beta Equation with Picmonic for College

With Picmonic, facts become pictures. We've taken what the science shows - image mnemonics work - but we've boosted the effectiveness by building and associating memorable characters, interesting audio stories, and built-in quizzing.

Beta Equation

Beta Fish
Picmonic

Beta of a stock or portfolio measures the correlated volatility of an asset or portfolio in relations to the volatility of the financial market. It quantifies the sensitivity of a share price to movement in the market price. It measures systematic risk, which is the risk inherent in the whole financial system. Beta Coefficient is calculated as covariance of a portfolio or stocks returns divided by variance of market return.

A beta coefficient of 1 suggests that the stock or portfolio carries the same risk as the overall market.  A negative beta is generally an asset that moves in the opposite direction as compared to the market. A beta of zero represents that the movement of the asset is uncorrelated with the movement of the benchmark. A beta below 1 but greater than zero suggests a below average risk and return, and beta higher than 1 suggests an above average risk and return.

INSTRUCTIONAL DRY AUDIO

Beta Coefficient, The Giant Beta Fish, is a measure of correlated volatility of an asset or portfolio in relations to the volatility of the market. To calulate the Beta Coefficient, use the covariance, Coin Virus on top of the water, of the rate of return of the porfolio, Red Lantern with a Portolio in it, and rate of return of the market, Red Lantern with a Marker in it,  divided by variance of market return, Virus holding a Marker under the water.

Creative story

This marker virus owns a beta fish farm.  He is under the water marking the beta fish that has the most potential for profit in the volatile fish market.  His coin virus associate is all about the money.  His portfolio red lantern lights his way where ever he goes.  He assists in marking the fish by luring them in with his marker red lantern.

4 KEY FACTS
Covariance of Rates of Return
Coin Virus Holding Two Red Lanterns

Covariance between the rate of return of the portfolio and rate of return of the market.

Rate of Return of the Portfolio
Red Lantern Portfoilio

Rate of Return of the Portfolio, of the asset, of the underlying stock that being measured.

Variance of the Market
Virus with Marker

Variance of the market measures the volatility of the market returns.

Rate of Return of the Market
Red Lantern Marker

Rate of Return of the overall market benchmark.

Unlock all 4 facts & definitions with Picmonic Free!

JOIN FREE

Take the Beta Equation Quiz

Picmonic's rapid review multiple-choice quiz allows you to assess your knowledge.

START QUIZ NOW

It's worth every penny

Our Story Mnemonics Increase Mastery and Retention

Memorize facts with phonetic mnemonics

Unforgettable characters with concise but impactful videos (2-4 min each)

Ace Your College Classes & Exams with Picmonic:

Over 900,000 students use Picmonic’s picture mnemonics to improve knowledge, retention, and exam performance.

Choose the #1 College student study app.

Picmonic for College covers information that is relevant to your entire College education. Whether you’re studying for your classes or getting ready to conquer , we’re here to help.

Works better than traditional College flashcards.

Research shows that students who use Picmonic see a 331% improvement in memory retention and a 50% improvement in test scores.