What is Beta in Investing? | Trading Data Science

Defining Beta in trading and how to use this concept to improve market awareness and your trading! See more options trading videos: http://ow.ly/QkQOW Today, on this segment of "The Skinny on Options Data Science", Tom Sosnoff and Tony Battista along with our own Dr. Data (Michael Rechenthin, PhD) discuss a topic important for options traders to understand. This segment should be of value to all traders. The discussion began with a brief explanation of what Beta is: beta is a measure of an underlying's historical volatility with respect to a benchmark (usually the S&P 500). One can calculate beta using a spreadsheet but many trading platforms and mutual fund prospectus provide the information for free. A chart was shown plotting data points of the Dow Jones returns (DIA) compared to the S&P 500 returns (SPY). Dr. Data explained how to fit a line using “regression” and supplied the simple calculation. He then briefly explained how the correlation was measured and how it should be used along with beta in order to determine how "reliable" the beta is. A slide was shown with charts showing the correlation of the DIA to the SPY (same as earlier), Diamond Offshore (DO) to the SPY and the 2x Bear ETF (SDS). The actual correlation and beta were listed beneath each. The DIA has a high correlation and beta, DO has a low correlation but moderately high beta and SDS has a high negative correlation and negative beta. Anyone with a free Google email address can use Googlesheets to make the calculations themselves and pull in the data. Dr. Data explained how to do that. The relevance to a pairs trade was explained. Watch this segment of "The Skinny On Options Data Science" with Tom Sosnoff, Tony Battista and Dr. Data for a great explanation of Beta and how it can help your understanding of the markets and your trading. Math is the most feared four-lettered word around, even to Tom and Tony. Luckily the well dressed Dr. Data is here to show how to tame the beast and even use it to make money. Check out his segments on analysis and data manipulation to understand the reasoning behind our trades. You can watch a new Skinny on Options Data Science episode live and check out all previous episodes everyday at http://ow.ly/EoyGW! ======== tastytrade.com ======== Finally a financial network for traders, built by traders. Hosted by Tom Sosnoff and Tony Battista tastytrade is a real financial network with 8 hours of live programming five days a week during market hours. Tune in and learn how to trade options successfully and make the most of your investments! https://goo.gl/OTv3Ez Subscribe to our YouTube channel: http://goo.gl/s2bAxF Watch tastytrade LIVE daily Monday-Friday 7am-3:15pmCT: http://ow.ly/EbzUU Follow tastytrade: Twitter: https://twitter.com/tastytrade Facebook: https://www.facebook.com/tastytrade LinkedIn: http://www.linkedin.com/company/tastytrade Instagram: http://instagram.com/tastytrade Pinterest: http://www.pinterest.com/tastytrade/