Beta decay (finance)
Encyclopedia
Beta decay in finance refers to the tendency for a company with a high beta coefficient
to have its beta coefficient normalize to the market beta. It is an example of regression toward the mean
.
Beta coefficient
In finance, the Beta of a stock or portfolio is a number describing the relation of its returns with those of the financial market as a whole.An asset has a Beta of zero if its returns change independently of changes in the market's returns...
to have its beta coefficient normalize to the market beta. It is an example of regression toward the mean
Regression toward the mean
In statistics, regression toward the mean is the phenomenon that if a variable is extreme on its first measurement, it will tend to be closer to the average on a second measurement, and—a fact that may superficially seem paradoxical—if it is extreme on a second measurement, will tend...
.