Beta vs. Volatility

This video shows the difference between a stock's beta and its volatility. Volatility is a measure of total risk, which includes systematic risk (market risk) and unsystematic risk (firm-specific risk). This means that you might occasionally encounter the following situation: Firm A has a lower beta than Firm B, but Firm A has a higher volatility than Firm B. This simply means that Firm A has lower market risk, yet higher total risk, which implies that Firm A's firm-specific risk must be higher than the firm-specific risk of Firm B.
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[@garciarogerio6327]

5 minutes on KZbin is very well capable of teaching an entire one-hour course in college. Great explanation. Thank you so much

[@ping6366]

Could not agree more.

[@blessingakusobi6990]

I was wondering if based on your example I can say that: The Mcdonalds stock return is more sensitive to the overall market change (having 0.70 given 1% change in the market portfolio) than it is sensitive to firm specific risk because its volatility is 1.05 so I did 1.05-0.75= 0.35 which is the percentage of firm specific risk/unsystematic risk.(this is lower than the 0.7 of beta) I would appreciate if you could confirm if I have understood the 2 concepts correctly. And thank you so much for your videos! They are so clear and amazing!

[@eddiem1155]

Thank you for this explanation

[@Edspira]

You are welcome!

[@user-st6is9ml4x]

So Amazon's, Volatility = Beta + firm specific 1.02 = 1.46 + (-0.44) So Amazon has -0.44 firm specific risk? Due to internal issues its returns will decrease by 0.44% from last year??

[@sanjidislammihir7452]

44%

[@stanko4333]

What if beta and standard dev are both near 1 ?

[@NiteshKumar-vg9il]

Then stock of firm will move according to market.

[@indirapant8303]

What is beta -1 indicate?

[@ramonpurugganan1592]

Why it gets cut?

[@grantcooke3622]

McDonald's fire their CEO imagine that! 2:58