What Is Beta? Meaning & Example
Definition
Beta measures how much an investment tends to move relative to the overall market. A beta above 1 means it usually swings more than the market, below 1 means less.
Related terms
Alpha is the return an investment earns above or below what would be expected given its risk relative to a benchmark. Positive alpha suggests outperformance after adjusting for risk.
VolatilityVolatility measures how much and how quickly prices move. Higher volatility means bigger swings, which bring both more opportunity and more risk.
BenchmarkA benchmark is a standard, often a market index, used to measure an investment's performance. Comparing with a suitable benchmark shows whether a strategy added value.
What is Beta?
Beta measures how much an investment tends to move relative to the overall market. A beta above 1 means it usually swings more than the market, below 1 means less.
Can you give an example of Beta?
A stock with a beta of 1.5 might rise about 15% when the market rises 10%, and fall more in declines.