Bloomberg Terminal Guide

Bloomberg provides real-time and historical pricing, indicative and fundamental data, charts and graphs on various topics, customized analytic, company and industry news, economic data, statistics, and estimates.

Beta

What is Beta??

Beta (β) is a measure of volatility, or systematic risk, of a security or portfolio in comparison to the market as a whole. (Most people use the S&P 500 Index to represent the market.)

Beta is also a measure of the covariance of a stock with the market. It is calculated using regression analysis.

  • A beta of 1 indicates that the security's price is expected to move exactly with the market.
  • A beta greater than 1 indicates that the security's price is expected to be more volatile than the market.
  • A beta of less than 1 indicates that the security's price is expected to be less volatile than the market.

You can think of beta as the tendency of a security's returns to respond to swings in the market. For example, if a stock's beta is 1.2, then it is theoretically 20% more volatile than the market.

Finding Beta of a Stock

Enter this command to look up the beta of a stock:

<ticker symbol> <EQUITY> BETA <GO>

Example: The screenshot shows the result for the beta of Goldman Sachs. 

GS  <EQUITY> BETA  <GO>

Goldman Sachs beta information from Bloomberg

Using the default settings, Bloomberg performs a regression of the historical trading prices of the stock against the S&P 500 (SPX) using weekly data over a two-year period. Depending on the security, you can often find data for the past 20-25 years!

The graph above shows the regression plotted. The independent variable (the index) is on the x-axis and the dependent variable (the stock price) is on the y-axis. The latest observation is shown by a flashing red dot.

The beta is leveraged if the firm has had long-term debt on its balance sheet for the past two fiscal years. You can check to see if the firm has long-term debt by using the command: 

<ticker symbol> <EQUITY> DES9  <GO>

Bloomberg reports both the Adjusted Beta and Raw Beta. The adjusted beta is an estimate of a security's future beta. It uses the historical data of the stock, but assumes that a security’s beta moves toward the market average over time. The formula is as follows:

Adjusted beta = (.67) * Raw beta + (.33) * 1.0

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