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Finding Your 401k Beta

In: Business and Management

Submitted By tpugh1
Words 650
Pages 3
Project 4: Finding Your 401(k) Beta

The following report will evaluate and compare the systematic risk of the stocks within a 401(k) investment portfolio. The time period for which the stocks in this investment portfolio have been analyzed is January 1, 2004 through December 31, 2014. Each stock has had a beta test and corresponding regression analysis performed. A portfolio-wide beta test has also been completed to make further detailed conclusions. The beta of each stock will be compared to that of its standard. Any observations made from the betas will also be reported. The below table represents the stock breakdown of the 401(k) investment portfolio. The portfolio consists of twelve stocks, representing seven of the major industry categories. Six of the twelve stocks come from the consumer goods industry, with half being cyclical and the other half being non-cyclical. The remaining industry categories included in this portfolio are two from industrials and one of each from the following categories: energy, telecommunications, technology, and healthcare. A further analysis shows that 60% of the portfolio is made up of consumer goods, while the remaining percents are as follows: 15% energy, 10% industrials, 5% telecommunications, 5% technology, and 5% healthcare.

The below table represents the portfolio beta and the beta for the individual stocks within the portfolio. The total beta represents the portfolio beta amount for each stock as of the weighted percentage. The below beta analysis for this portfolio indicates that it is less volatile than the market over this historical period. Only two of the of the stocks in this portofilio were more volatile than the market during this period. Looking at beta alone, this portfolio is in good standing concerning market volatility.

All industry categories have a common beta variance, and this is because…...

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