Finance analysis ( writing )
04/06/2017
Company : GE
Analysis. Using the beta you calculated, explain how risky your stock is relative to the S&P500. Compare the beta that you calculate with the beta that is provided on the http://finance.yahoo.com website (or some alternative source) for your stock. If they differ, why do you think this might be the case?
The GE Beta from the equation is approximately 1.19. The Beta figure serves as a benchmark to draw comparison of a stock company in relation S&P 500 index. A beta figure 1 is perfectly correlated to S&P 500. For instance the GE Beta of 1.19 indicates it has gained 11.9% every moment the S&P 500 increases by 11.9% but declines on a larger amount when S&P declines. In other words, the GE Beta is theoretically 19% more volatile than S&P index or the market. A Beta greater than one offers the possibility of a higher return in an upturn but also pose more risk in a down turn more than the latter. GE stock computed above differs due to technical stock forces such as inflation and investor sentiment.