Which term refers to a portfolio’s risk adjustment related to the market?

The term that refers to a portfolio's risk adjustment related to the market is beta. Beta is a measure of a portfolio's sensitivity to market movements; it indicates how much the portfolio's returns are expected to change in relation to changes in the overall market returns.

A beta greater than 1 suggests that the portfolio is expected to be more volatile than the market, meaning it will likely experience larger price swings in either direction. Conversely, a beta less than 1 indicates lower volatility relative to the market. A beta of 1 implies that the portfolio's price movements are expected to be in line with those of the market.

In portfolio management, understanding beta is crucial for investors looking to assess the systematic risk associated with their investments. It helps in making informed decisions about asset allocation and in understanding how a portfolio might behave in relation to market conditions.

In contrast, terms such as correlation, alpha, and volatility focus on different aspects of investment performance and risk. Correlation refers to the degree to which two securities move in relation to each other. Alpha indicates the active return on an investment compared to a market index, reflecting outperformance or underperformance. Volatility measures the extent of price fluctuations over time, but it does not necessarily provide information on how those