It is possible for a firm to have a positive beta, even if the correlation between its returns and those of another firm are negative.

Question

Quizplus · Accepted Answer

Beta measures the sensitivity of a stock's returns to changes in the overall stock market. A positive beta means that the stock tends to move in the same direction as the overall market. The correlation between the returns of two firms measures the degree to which their returns move together. It is possible for one firm to have a positive beta while its returns are negatively correlated with another firm's returns, as long as both firms have different sensitivities to market changes.

It Is Possible for a Firm to Have a Positive