Beta (The market used)

[Navarino]

Primarily re. the UK. Market....

When calculating beta and correlation, often the market used is FTSE100. However, there seems to be many variants on this as evidenced by different beta values being reported for the same security, across different products, e.g. Sharescope vs. Digital Look. It may be that some correlate with the FTSE100, while other correlate with the index they belong to.

Anyone shed any light as to what the professional standard should be?

Thanks

 

[Silent.Trader]

Anyone shed any light as to what the professional standard should be?

I don't think there's a professional standard. Apart from that I personally see only very limited use in beta value's, the standard should depend on the use. I'ld say measure beta against the benchmark. If the benchmark is FTSE100 take FTSE100, if it's NDX, a Biotech index or MSCI World take those. If you want to use it for a pair trade measure them against each other.

It may be, for comparison reasons, more practical to calculate beta always compared to the same benchmark, but figures may differ significantly for the same stock depending on the benchmark choosen.