DEFINITION of 'Beta'
A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Beta is used in the capital asset pricing model (CAPM), a model that calculates the expected return of an asset based on its beta and expected market returns.
Also known as "beta coefficient."
INVESTOPEDIA EXPLAINS 'Beta'
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 hightech, Nasdaqbased stocks have a beta of greater than 1, offering the possibility of a higher rate of return, but also posing more risk.
Test your Beta knowledge and read more here: Beta: Know the Risk and Calculating Beta: Portfolio Math for the Average Investor
VIDEO

Volatility Smile
A ushaped pattern that develops when an optionâ€™s implied volatility ... 
Sortino Ratio
A modification of the Sharpe ratio that differentiates harmful ... 
CBOE Nasdaq Volatility Index  ...
A measure of market expectations of 30day volatility for the ... 
TimeVarying Volatility
Fluctuations in volatility over time. Volatility is the standard ... 
Local Volatility
A model used in quantitative finance to calculate the unpredictability ... 
Stochastic Volatility  SV
A statistical method in mathematical finance in which volatility ...

Fundamental Analysis
Why do I need to unlever beta when making WACC calculations?
Dive into weighted average cost of capital calculations, and see why firms both unlever and relever beta to compare debt and equity financing costs. 
Investing Basics
What's the difference between alpha and beta?
Learn about alpha and beta, two very important technical risk ratios that investors use to evaluate relative performance, and their different interpretations. 
Investing
How do you calculate beta in Excel?
Learn how to calculate the beta of an equity investment using Microsoft Excel, including how to use a regression or the slope of a trendline. 
Fundamental Analysis
How do I unlever beta?
Learn how to calculate the unlevered beta of a company and understand the differences between standard beta versus unlevered beta when evaluating risk. 
Fundamental Analysis
Discounted Cash Flow Analysis
Find out how analysts determine the fair value of a company with this stepbystep tutorial and learn how to evaluate an investment's attractiveness for yourself. 
Personal Finance
Does Your Investment Manager Measure Up?
These key stats will reveal whether your advisor is a league leader or a benchwarmer. 
Investing Basics
Beta: Know The Risk
Beta says something about price risk, but how much does it say about fundamental risk factors? Find out here. 
Investing Basics
Day Trading Strategies
Day trading is the term often used for buying and selling stocks within the same day. Day traders seek to make a profit by leveraging large amounts of capital in order to take advantage of small ... 
Investing Basics
Calculating Beta: Portfolio Math For The Average Investor
Beta is a useful tool for calculating risk, but the formulas provided online aren't specific to you. Learn how to make your own. 
Trading Strategies
Guide to Pairs Trading
Pairs traders wait for weakness in the correlation, and then go long on the underperformer while simultaneously going short on the overperformer, closing the positions as the relationship returns ...