Why is it so common to use historical financial data to estimate future market betas?

 

Question:

1.Why is it so common to use historical financial data to estimate future market betas?

Beta is the relation of stock movement with respect to market index. Thus in order to finding the beta required to use historical data of market return and stock return and one can find the beta.

Mostly, the use historical financial data because market follows random walk and it is very hard to measure stock or market behavior using future assumptions thus we use historical data because it has some information that can impact the movement of stock in future that's why it is common to use historical data to estimate future market betas.