Stock's Beta

Stock's Beta indicates the volatility(stock price fluctuations/swings) of the stock in relation to the stock market in general. This volatility is often measured against a benchmark e.g. S&P 500 index.

A stock with a beta of 1.3 is, in general, 30% more volatile than the market, whereas a stock with a beta of 0.8 is 20% less volatile than the market.

In other words, if you do NOT want your stocks to have large stock price swings whenever the major indexes such as S&P 500 or Dow go UP or DOWN, you should go for stocks with beta of less than 1.




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