Page 47 - Intelligent Investing (3)
P. 47
Analyzing Risk & Performance Over Time
The 2 greatest determining factors for performance are earnings and price
Here’s how we calculate Risk/Reward Ratio
Standard Deviation - How much a fund deviates from its average rate of return.
High Standard Deviation means high risk and vice versa
Beta - Measurement of volatility between a fund to it’s average. A Beta higher than
1.00 means the fund is more volatile than its benchmark & vice versa.
Ex. a Beta with a 1.50 means the fund is 50% more volatile than market average.
