what is Beta

Beta

Beta is a measure of the stock's volatility whether it moves in conjunction with the market or an event. It is important to look at a stock's beta when analyzing risk and planning your investment. It gauges the volatility of a security with a benchmark such as the S&P 500 or Dow Jones Industrial Average which represents the general stock market. A security that has a beta of 1 means it moves with the market's direction, if an index such as the S&P 500 is up 15% for the quarter, that stock's return is also within that range. A stock with a beta of less than 1 tends to lag the index a bit if not significantly. Speculative stocks have betas greater than 1, they fluctuate in price faster than the market and produce bigger returns or losses within a time period.

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