What are the Limitations of Beta?

What are the Limitations of Beta?

Abdulla Javeri

30 years: Financial markets trader

When numbers are used to estimate what is likely to happen in the future, there are always limitations. In this video, Abdulla discusses the limitations of beta including evaluating its consistency, the data set used and the nature of the regression line.

When numbers are used to estimate what is likely to happen in the future, there are always limitations. In this video, Abdulla discusses the limitations of beta including evaluating its consistency, the data set used and the nature of the regression line.

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What are the Limitations of Beta?

4 mins 13 secs

Overview

Beta has its own shortcomings including change over time, heavy dependence on the data set and the reliance on a linear regression model.

Key learning objectives:

  • Explain the limitations of beta

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Summary
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Expert
Abdulla Javeri

Abdulla Javeri

Abdulla’s career in the financial markets started in 1990 when he entered the trading floor of the London International Financial Futures Exchange, LIFFE, and qualified as a pit trader in equity and equity index options. In 1996, Abdulla became a trainer for regulatory qualifications and then for non-exam courses, primarily covering all major financial products.

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