characteristic line

Characteristic line

The market model applied to a single security; a regression of security returns on the benchmark return. The slope of the regression line is a security's beta.

characteristic line

characteristic line A straight line on a graph that shows the relationship over time between returns on a stock and returns on the market. The line is used to illustrate a stock's alpha (the vertical intercept) and beta (the line's slope) and to show the difference between systematic and unsystematic risk.