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Zero Beta Asset

Zero-Beta Asset

Definition

Financial risk is heightened when all investments in a portfolio are subject to the same risk factors. For example, if a portfolio is composed of nothing but Dow Jones Industrial Average (DJIA) equities, each stock's price is subject to the same risk factors. This is known as correlation. Any investment that does not correlate with an index such as the DJIA or overall market results is a zero-beta asset.

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