Equities
Beta
A beta of 1 means a stock tends to move in line with the market. A beta above 1 signals it is more volatile, amplifying the market's ups and downs, while a beta below 1 suggests it is steadier.
High-beta names like many technology and cyclical stocks can deliver outsized gains in rallies but also sharper losses in selloffs. Low-beta defensives cushion a portfolio when markets tumble.
Investors use beta to shape how aggressive or defensive a portfolio is. Blending high- and low-beta holdings is one way to dial overall risk up or down.
Example
A stock with a beta of 1.5 would be expected to rise or fall about 15% when the market moves 10%.
Beta — FAQ
What is Beta?
Beta measures how much a stock's price tends to move relative to the overall market, indicating its volatility and sensitivity to market swings.
Can you give an example of Beta?
A stock with a beta of 1.5 would be expected to rise or fall about 15% when the market moves 10%.
Understanding creates conviction.
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