What Is Beta in Stocks?
Beta measures how much a stock tends to move compared with the whole market. A beta of 1 means it usually moves in step with the market.
What beta numbers mean
- Beta 1: moves like the market.
- Beta 1.5: tends to move 50% more. If the market rises 10%, it often rises about 15%, and falls more in drops too.
- Beta 0.5: tends to move half as much.
- Negative beta: tends to move opposite. Rare for stocks.
Which stocks have high beta
Fast-growing tech and young companies often have high beta. Utilities and consumer staples, which sell things people always need, usually have low beta. See sectors.
Limits of beta
Beta is based on past price moves, and the future can differ. It also only measures swings in line with the market, not company-specific risks like a failed product.
See it in real companies
Open a company to see what it sells and how it makes money.