Returns and data
Adjusted close
An adjusted closing price is a vendor-calculated historical price that attempts to account for specified corporate actions, commonly stock splits and sometimes cash distributions.
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Financial terms, explained in context
Each term gets its own page because the small print often changes what a financial number means.
A definition is only the start. These pages explain how a term is used, where the definition can break down, and what Betta Signals records before putting the term beside a calculation.
The library currently covers every financial term used as a core concept in our public research foundation. It will expand as new research introduces new terminology.
A
Risk and performance
Alpha
Alpha is a model-dependent estimate of return above or below the return predicted by a selected benchmark and risk model.
Securities
American depositary receipt (ADR)
An ADR is a U.S.-traded certificate issued by a depositary bank that represents a stated number of shares, or a fraction of a share, in a foreign company.
Returns and data
Annualized return
Annualized return expresses a multi-period result as an equivalent yearly rate, usually using compounding rather than a simple division by the number of years.
Portfolio concepts
Asset allocation
Asset allocation is the way a portfolio is divided among asset categories such as stocks, bonds, and cash or cash equivalents.
B
Risk and performance
Benchmark
A benchmark is a reference index, security, or portfolio used to judge performance or risk over a defined period.
Risk and performance
Beta
Beta estimates how sensitively an investment's historical returns moved with a selected market benchmark.
Securities
Bond
A bond is a debt security through which an investor lends money to an issuer in exchange for promised interest and repayment terms.
C
Returns and data
Capital gain
For U.S. federal tax purposes, a capital gain generally arises when a capital asset is sold for more than its adjusted basis.
Funds and products
Closed-end fund
A closed-end fund is an investment company with a generally fixed number of exchange-traded shares whose market price can differ from its net asset value.
Returns and data
Compound annual growth rate (CAGR)
CAGR is the constant compounded yearly rate that would connect a beginning value with an ending value over a stated number of years.
Returns and data
Corporate action
A corporate action is an issuer or fund event that changes a security, its cash flows, its share count, or the rights attached to it.
Risk and performance
Correlation
Correlation is a standardized measure of how two return series moved together, commonly ranging from -1 to +1.
Risk and performance
Covariance
Covariance measures whether two variables, such as two return series, tend to move above and below their averages together.
D
Funds and products
Distribution
A distribution is cash or property paid by a corporation or pooled investment vehicle to shareholders or unitholders. Its legal and U.S. federal tax character depends on the issuer and the payment.
Returns and data
Dividend
A dividend is a distribution of money or property that a corporation pays to shareholders, usually after authorization by its board.
Returns and data
Dividend yield
Dividend yield divides a stock's annual dividend by its current market price.
Risk and performance
Drawdown
Drawdown is the decline from a prior portfolio or security peak to a later trough, usually expressed as a percentage.
E
Company fundamentals
Earnings per share (EPS)
Earnings per share allocates a company's profit or loss available to common shareholders across a weighted average number of common shares.
Funds and products
Exchange-traded fund (ETF)
An ETF is a pooled investment fund whose shares trade on a stock exchange at market prices.
Funds and products
Exchange-traded note (ETN)
An ETN is an unsecured debt obligation designed to pay a return linked to an index or strategy, subject to the issuer's creditworthiness and the note's terms.
Funds and products
Expense ratio
A fund expense ratio expresses certain annual operating expenses as a percentage of average net assets.
I
Risk and performance
Index
A market index measures the performance of a basket of stocks selected to represent part of the stock market.
L
Risk and performance
Liquidity
Liquidity describes how readily an asset can be bought or sold in meaningful size without causing a large price change.
M
Company fundamentals
Market capitalization
Market capitalization is the market value of a company's outstanding equity, commonly calculated as share price multiplied by shares outstanding.
Funds and products
Mutual fund
A mutual fund pools money from investors and issues redeemable shares priced from the fund's net asset value under its governing documents.
N
Funds and products
Net asset value (NAV)
NAV is the value of a fund's assets minus its liabilities, generally expressed on a per-share basis at a stated valuation time.
P
Returns and data
Price return
Price return measures the percentage change in a security's price between two points without adding cash distributions.
Company fundamentals
Price-to-earnings ratio (P/E)
The price-to-earnings ratio divides a stock's current price by its earnings per share.
Documents and rules
Prospectus
For a mutual fund or ETF, a prospectus is a formal disclosure document describing the fund's objectives, risks, performance, and expenses.
R
Funds and products
Real estate investment trust (REIT)
A real estate investment trust is a company that owns and typically operates income-producing real estate or related assets.
Risk and performance
Risk
Investment risk is the possibility that actual outcomes differ from what an investor expects, including the possibility of losing some or all invested capital.
S
Documents and rules
SEC filing
An SEC filing is a document submitted through the U.S. Securities and Exchange Commission's filing system under applicable securities laws and rules.
Securities
Share class
A share class is a category of equity or fund shares with specified voting, economic, fee, conversion, or distribution rights.
Securities
Stock
A stock is an equity security representing an ownership interest in a corporation, with rights determined by the share class and governing documents.
Returns and data
Stock split
A stock split changes the number of shares and the per-share price by a stated ratio without, by itself, changing the holder's proportional ownership value.
T
Returns and data
Total return
Total return combines price change with cash distributions and other value received over a period, using an explicitly stated reinvestment method when applicable.
V
Risk and performance
Volatility
Volatility describes the degree to which a security's or market index's price moves up and down over time.
Y
Returns and data
Yield
Yield expresses income relative to an investment's price or another stated base. The calculation depends on the security and the named yield convention.