R-squared

Categories: Technical Analysis, Investing and Trading, Stocks,

R-squared is a statistical measurement that determines the proportion of a security's return, or the return on a specific portfolio of securities, that can be explained by variations in the stock market, as measured by a benchmark index.For example, an r-squared of 0.08 shows that 80% of a security's return is the result of changes in the market - specifically that 80% of its gains are due to market gains and 80% of its losses are due to market losses. The other 20% are the result of factors particular to the security itself.