Finance Definition
Beta
📈 Investing
intermediate

Quick Definition

Beta is a measure of a stock's volatility in relation to the overall market.

Formula

Beta = Covariance(Stock, Market) / Variance(Market)

Examples

  • 1A stock with a beta of 1.5 is expected to be 50% more volatile than the market.
  • 2If the market increases by 10%, a stock with a beta of 0.5 would typically increase by only 5%.
  • 3During a market downturn, a stock with a beta of 2.0 might drop twice as fast as the market.

Tags

betavolatilitystock-marketriskinvestment-analysis
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Stock Market
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Quick Info
Category:Investing
Difficulty:intermediate
Last Updated:6/17/2025