Asymmetric Beta
What is Asymmetric Beta?
Asymmetric is imbalance. Asymmetric is more of one thing, less of another.
An example of asymmetric is more profit than loss or more reward than risk. The payoff is non-linear.
The beta of an investment is a measure of the systematic or volatility because of exposure to market movements as opposed to individual security factors.
- Beta is the tendency of a security’s returns to respond to trends the market.
- Beta is also a measure of relative strength or relative momentum.
For example, if we are looking at the beta of a stock and assume the S&P 500 stock index is “the market” if the stock has a beta of 1.5 it means the price has moved 50% more than “the market”.
So, an Asymmetric Beta must mean the beta (movement relative to the market) is asymmetric (imbalanced).
Asymmetric Beta is a position taken with a non-linear asymmetric payoff. That is, the beta is asymmetric (more or less than 1) and more than symmetry (a beta of 1).
To see asymmetric investment returns, visit ASYMMETRY®
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ASYMMETRY® Observations 