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Pastimes : Bad investing information/advice on the net contest
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To: Edwarda who wrote (106)10/7/1999 11:25:00 PM
From: The Other Analyst  Read Replies (1) of 214
 
OK, let's get back to the purpose of the thread--bad information on the net.
Most sites with glossaries define beta and volatility as if they were the same, which they are not.

Example, the investorwords.com site.
investorwords.com
beta
A quantitative measure of the volatility of a given stock, mutual fund, or portfolio, relative to the overall market, usually the S&P 500. Specifically, the performance the stock, fund or portfolio has experienced in the last 5 years as the S&P moved 1% up or down. A beta above 1 is more volatile than the overall market, while a beta below 1 is less volatile. see also alpha, modern portfolio theory.
Not quite correct, although close. beta is the correlation between the asset price change and the market price change. the five years part is not part of the definition. The reference to 1% is also not correct.

and here is the definition of volatility from the same site.
volatility
The relative rate at which the price of a security moves up and down; found by calculating the annualized standard deviation of daily change in price.

Volatility is the annualized standard deviation of daily price changes, so that part is correct. But there is nothing "relative". The relative part is where beta comes in.
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