Glossary · Markets
Beta
Beta measures how much a stock moves relative to the overall market. A beta of 1 means it moves in step with the market; 1.5 means it moves 1.5% on average when the market moves 1%; below 1 means it is steadier than the market.
How to read it
High-beta stocks (semiconductors, high-growth tech) gain more in bull markets and lose more in declines. Low-beta stocks (utilities, consumer staples) do the opposite.
Read beta together with correlation. When correlation is very low, the beta figure means little, because the stock's moves are driven mainly by company-specific factors.
Common pitfalls
- Beta is calculated from historical data. Once a company's business changes, its past beta no longer applies.
- Beta captures only the portion of risk that comes from following the market. It does not include company-specific risk.
On FinDog
"Volatility & Correlation" in the Decision Panel on each stock page shows the stock's beta against the S&P 500, its correlation and its annualized volatility over the past year.
See it on a stock page →Related terms
- VIXThe VIX is derived from the prices of S&P 500 index options and reflects how much volatility the market expects over the next 30 days, on an annualized basis. The higher the reading, the more investors are willing to pay for insurance.
- 52-Week RangeThe 52-week range is a stock's highest and lowest price over the past year. Where the current price sits within that range is the simplest reference point for whether the stock is expensive or cheap right now.
Glossary entries are for investor education only and are not investment advice. About & Methodology · Disclaimer