Can beta be negative, and what does a negative beta indicate?

Yes, beta can be negative, and a negative beta indicates that an investment moves in the opposite direction of the overall market.

A negative beta means that when the market goes up, the investment tends to go down, and when the market goes down, the investment tends to go up. This is also known as a “defensive” investment, as it tends to perform well during market downturns.

Investments with negative betas are relatively rare, but they do exist. For example, investments in gold and other precious metals are often considered to have negative betas because they tend to perform well during market downturns when investors seek out safe-haven assets.

In general, a negative beta is an indication that an investment has a low correlation with the overall market, and can be useful for diversifying a portfolio and reducing overall risk. However, it’s important to note that a negative beta doesn’t necessarily mean an investment is risk-free or guaranteed to perform well, as there are many other factors that can influence an investment’s performance.