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

Question

Quizplus · Accepted Answer

Beta measures the volatility of a stock in relation to the overall market, not necessarily the correlation between two specific stocks. It is possible for a company to have a positive beta if it is more volatile than the market, even if its returns are negatively correlated with another firm.

It Is Possible for a Firm to Have a Positive