What is a common characteristic of assets with a negative beta?

Assets with a negative beta are specifically known for their tendency to move in the opposite direction of the overall market. This means that when the market is experiencing a downturn, these assets tend to increase in value. This characteristic can make negative beta assets appealing to investors looking for some level of protection during market declines.

For instance, certain types of investments, such as gold or specific hedge funds, might have negative betas since they can perform well when traditional markets are falling. This relationship is important for diversification strategies, as these assets can help stabilize a portfolio against market volatility.

In contrast, assets with a perfect correlation to the market typically have a beta of one, meaning they move in tandem with market movements. Stable investments are not necessarily defined by their beta value; they may have a low beta but still not be negatively correlated with market movements. Lastly, all investments generally benefit from monitoring, but the requirement for constant monitoring is not specifically related to negative beta assets.