What are the Limitations of Beta?
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.
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
Summary
Expert
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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