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Covariance
A measure of the degree to which returns on two risky assets move in tandem. A positive covariance means that asset returns move together. A negative covariance means they vary inversely.
Variance
A measure of the dispersion of a random variable. Equals the expected value of the squared deviation from the mean.
Fairly-Priced Securities
Securities that are believed to be priced appropriately according to their risk level and the expected rate of return.
Positive Betas
A term referring to financial securities that have a beta greater than zero, indicating that their returns generally move in the same direction as the market.
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