Beta
How volatile a stock is compared to the overall market
Definition
Beta measures a stock's price sensitivity relative to the broader market (typically the S&P 500, which has a Beta of 1.0). A Beta of 1.5 means the stock tends to move 50% more than the market: up 15% when the market rises 10%, and down 15% when it falls 10%. Beta only measures historical price volatility, not business or financial risk.
Calculated from regression of stock returns vs. market returns
Example
A utility stock with Beta of 0.4 barely moves when markets swing. NVDA with Beta of 1.8 amplifies market moves by 80%.
Typical range
< 0.8: defensive; 0.8-1.2: market-like; > 1.5: high volatility