Glossary
Beta
How much a position moves with the overall market. A beta of 1 moves with the market; leverage raises beta. Gains from simply taking more beta are not an edge.
In plain terms
Beta is the cheapest thing in investing — anyone can buy more market exposure. That is why honest performance evaluation strips beta out first: a fund that beat the index in a bull market by holding 1.3× exposure demonstrated leverage, not skill.
Many 'AI stock-picking' results dissolve under this lens. When we regressed our test strategies against the index, most of their excess return in good years was just higher beta showing up as skill.
Related terms
Educational definitions only. Not investment advice.