In order to fully understand whether CHR is a good investment for you, we also need to consider important company-specific fundamentals such as Chorus Aviation’s financial health and performance track record. Alternatively, an strong dividend payer might move less than the market because investors are valuing it for its income stream. Typically, smaller companies have a low beta if their share price tends to move a lot due to company specific developments. The Chorus Aviation doesn’t usually show much sensitivity to the broader market. That could explain why this one has a low beta value. However, small companies can also be strongly impacted by company specific developments, which can move the share price in ways that are unrelated to the broader market. Small cap stocks ofthen have a higher beta than the overall market. Most companies this size are actively traded. TSX:CHR Income Statement Export October 24th 18 How does CHR’s size impact its beta?Ĭhorus Aviation is a small cap stock with a market capitalisation of CA$943m. Take a look at how Chorus Aviation fares in that regard, below. Share price volatility is well worth considering, but most long term investors consider the history of revenue and earnings growth to be more important. This suggests that including it in your portfolio will reduce volatility arising from broader market movements, assuming your portfolio’s weighted average beta is higher than 0.89. This is below 1, so historically its share price has been rather independent from the market. Zooming in on Chorus Aviation, we see it has a five year beta of 0.89. See our latest analysis for Chorus Aviation What does CHR’s beta value mean to investors? A stock with a beta greater than one is more sensitive to broader market movements than a stock with a beta of less than one. To use beta as an investor, you must first understand that the overall market has a beta of one. So, while useful, beta is not the only metric to consider. However, Warren Buffett said ‘volatility is far from synonymous with risk’ in his 2014 letter to investors. Beta can be a useful tool to understand how much a stock is influenced by market risk (volatility). Others tend towards stronger, gentler or unrelated price movements. Some stocks see their prices move in concert with the market. Every stock in the market is exposed to this volatility, which is linked to the fact that stocks prices are correlated in an efficient market. The other type, which cannot be diversified away, is the volatility of the entire market. Investors use diversification across uncorrelated stocks to reduce this kind of price volatility across the portfolio. The first type is company specific volatility. Modern finance theory considers volatility to be a measure of risk, and there are two main types of price volatility. If you’re interested in Chorus Aviation Inc ( TSE:CHR), then you might want to consider its beta (a measure of share price volatility) in order to understand how the stock could impact your portfolio.
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