Beta is a correlation coefficient times a ratio of standard deviations.

Question

Quizplus · Accepted Answer

Beta is defined as the covariance between the returns of an asset and the returns of the market divided by the variance of the market. Therefore, beta can be expressed as a correlation coefficient (covariance divided by the product of the standard deviations) multiplied by the ratio of the standard deviation of the asset returns to the standard deviation of the market returns.

Beta Is a Correlation Coefficient Times a Ratio of Standard