Factor Loadings
Factor loadings are coefficients that measure how sensitive an asset's or portfolio's returns are to the movements of underlying risk factors in a multi-factor model. Each loading represents exposure to a specific factor (for example, market, size, or value).
Example: A mutual fund with a factor loading of 1.2 on the market factor and 0.3 on the value factor would show a greater sensitivity to broad market movements and to value-style exposures, relative to other factors.
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