: Are stock returns based on market wide returns? Are stock returns based on market wide returns? When there is no new news released about the specific company, prices still rise or fall based on the market. When would a stock's

Vote Up Vote Down   0 Reactions

Login to give Reaction!

A company's performance is attributable to a mix of economy-wide (global and national) factors, industry-specific factors, and company-specific factors. The broader factors are sometimes expressed as "a rising tide lifts all boats". Thus, individual stocks tend to have a significant (but far from perfect) correlation with the broad market, and a stronger correlation with their own sector/industry. News about a company primarily affects that company's stock but is also aggregated as part of industry and market-wide information.

Another perspective on what drives stocks to perform similarly or differently is the Fama-French model.