Bull Beta

Bull beta is a relative measure of the sensitivity of an investment’s return to positive changes in the benchmark’s return. This separates the beta to show whether positive periods of performance of the fund are reflected by corresponding positive periods of performance in the benchmark.

For example:

A bull beta of 0.5 implies that for each 1% rise in the benchmark, the fund would rise by 0.5%. Conversely, if the bull beta were -1, for each 1% rise in the benchmark, the fund would fall by 1%.

The general rule:

• A positive bull beta means that a rise in the benchmark implies a rise in the fund.
• A negative bull beta means that a rise in the benchmark implies a fall in the fund.

The value of the bull beta indicates the magnitude of the above relationship. The greater the value of the bull beta, the better, and confidence in the beta must be qualified with a strong r-squared correlation between the fund and the benchmark.