Beta
A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.
Also known as "beta coefficient". Investopedia Says:
Beta is calculated using regression analysis, and you can think of beta as the tendency of a security's returns to respond to swings in the market. A beta of 1 indicates that the security's price will move with the market. A beta of less than 1 means that the security will be less volatile than the market. A beta of greater than 1 indicates that the security's price will be more volatile than the market. For example, if a stock's beta is 1.2, it's theoretically 20% more volatile than the market.
Many utilities stocks have a beta of less than 1. Conversely, most high-tech Nasdaq-based stocks have a beta of greater than 1, offering the possibility of a higher rate of return, but also posing more risk. Related Terms:
Alpha
Capital Asset Pricing Model - CAPM
Capital Market Line - CML
Consumption Capital Asset Pricing Model - CCAPM
Greeks
R-Squared
Sortino Ratio
Swing
Unlevered Beta
Weighted Average Cost of Capital - WACC |