Hedge Fund Terms – B

Benchmark for Correlation Values – The benchmark that the fund has chosen to run correlation values such as alpha, beta, R and R squared.

Benchmark for Graphing – This is the particular benchmark in which the fund has chosen to compare itself.

Beta – Beta is the measure of the volatility of the particular fund in relationship to the market. (Almost all fund managers correlate themselves to the S&P 500). A beta of greater than 1.0 indicates that the fund is more volatile than the market, and less than 1.0 is less volatile than the market. For example, if the market rises 1% and a fund has a beta greater than 2.5, the fund will rise, on average, 2.5%. For a fund with a beta of 0.4, if the market rises 1%, the fund will rise on average, 0.4%.

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