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Business Research: Beta


"Beta is an indicator of the risk associated with a particular share in relation to the risk of the equity market as a whole."
- excerpt from "Beta." Capstone Encyclopaedia of Business. Hoboken: Wiley, 2003. Credo Reference. 19 August 2009.

Various descriptions and definitions of "beta"

Value Line glossary description of "beta"

Sources for Beta:

See also the Value Line microfiche for historical values of beta.

Why Do Different Financial Sources Have Different Beta Values for the Same Company?

Compare the beta currently reported for a specific company from several different financial services, e.g.,

For two example companies, the beta values reported on a specific date were:

Financial Service Company A Company B
Google Finance 1.61 1.48
MSN Money 1.63 1.52
Reuters 1.63 1.52
Yahoo! Finance 1.67 1.62

In each case the beta values reported for company A were higher than those for company B, but if you retrieved the beta for company A from Google Finance and compared it with the beta for company B retrieved from Yahoo! Finance, you would have a different impression of their relative volatility.

Why do the values vary so much? Perhaps they are calculating the values using different periods of time for comparison. Most likely is that the services are using different benchmarks to represent the market against which the company is compared, e.g., one might use the S&P 500, another the New York Stock Exchange Composite Index, another the MSCI EAFE.

Regardless of the explanation as to why the values differ between the services, the key point to take away is that you can't accurately compare the beta values of different companies if you retrieve the beta values from different financial services, so use the same source for each company.