It is better to use an unlevered beta over a levered beta when a company or investor wishes to measure a publicly-traded security's performance in relation to market movements without the effects of that company's debt factor.ꦆ

Positive and Negative Levered Betas

A publicly traded security's levered beta 澳洲幸运5开奖号码历史查询:measures the sensitivity of that security's tendency to perform in relation to the overall market. The levered beta includes a company's debt in the calculation of its sensitivity. Security with positive levered beta signals that the security has a positive correlat✱ion with market performance and security with negative levered beta signals that the security has a negative correlation with market pe🍸rformance.

A levered beta greater than positive 1 or less than negative 1 means that it has greater 澳洲幸运5开奖号码历史查询:volatility than the market. A levere꧃d beta between negative 1 and positive 1 has less volatility than the market.

Unlevered Beta and Accuracy

In relation to levered beta, a security's unlevered beta has a value closer to zero; it has less volatility due to the tax advantages of debt.

A security's unlevered beta also measures that security's volatility and performance in relation to the overall market, but it takes out the effects of a company's debt factors. Since a security's unlevered beta is naturally lower than its levered beta due to its debt, its unlevered beta is more accurate in measuring its volatility and performance 澳洲幸运5开奖号码历史查询:in relation to the overall market.

澳洲幸运🍎5开奖号码历史查询:Calculating a security💖's unlevered beta gives potential investors valuable insight into the performance of that security when compared to the market. If a security's unlevered beta is positive, investors want to invest in it during 澳洲幸运5开奖号码历史查询:bull markets. If a security's unlevered beta is negative, investors want to invest in it during 澳洲幸运5开奖号码历史查询:bear markets.