Beta is a measurement of the historical correlation of a security's price movement with that of an applicable market index. The average beta of the securities held in your portfolio has generally ranged from .8 to .86. The beta of a security is calculated by comparing, through linear regression, the price returns of an individual stock and the price returns of the general market. Regression analysis then determines what line forms the best fit with the scatter diagram. The appropriate regression line is the one for which the sum of the squared distances between the points and the line is smallest.
Beta is a measurement of risk based on historical data.
The low average beta on the securities we hold is one illustration of how our value philosophy attempts to lessen the downside risk and volatility in our portfolios on a risk-adjusted performance basis.