Which is the best measure of risk for an asset held in a well-diversified portfolio

The Beta is the best measure for estimating the risk of an investment belonging to a diversified portfolio. It allows the investor to quantify the volatility of the security held in the portfolio compared with the market risks.

What is the best measure of portfolio risk?

Portfolio standard deviation is one of the most widely used metrics for evaluating risk. Mathematically, it refers to the extent of dispersion for a population of observations. This measure provides valuable insight if your goal is to look at investment return volatility.

What is the measure of risk in a diversified portfolio?

Beta is the measure of risk commonly used in Statistics. It is also applied to measure specific types of risk in other disciplines; in Finance, it is used to determine the systematic risk of an asset or a portfolio. Beta compares the volatility in returns of an asset or a portfolio with the market rate of return.

What is the measure of risk of an asset in a portfolio?

Beta measures the volatility of a portfolio compared to a benchmark index. The statistical measure beta is used in the CAPM, which uses risk and return to price an asset.