A high beta (greater than 1.0) indicates moderate or high price volatility. A beta of 1.5 forecasts a 1.5% change in the return on an asset for every 1% change in the return on the market.

What does a beta of 1.5 mean?

Roughly speaking, a security with a beta of 1.5, will have move, on average, 1.5 times the market return. [More precisely, that stock's excess return (over and above a short-term money market rate) is expected to move 1.5 times the market excess return).]

What is considered a high beta?

What are high-beta stocks? A high-beta stock, quite simply, is a stock that has been much more volatile than the index it's being measured against. A stock with a beta above 2 -- meaning that the stock will typically move twice as much as the market does -- is generally considered a high-beta stock.

What is a good beta score?

Stocks with a value greater than 1 are more volatile than the market (meaning they will generally go up more than the market goes up, and go down more than the market goes down). Stocks with a beta of less than 1 have a smoother ride as their moves are more muted than the market's.

What does a beta of 1.8 mean?

Beta indicates how volatile a stock's price is in comparison to the overall stock market. A beta greater than 1 indicates a stock's price swings more wildly (i.e., more volatile) than the overall market. A beta of less than 1 indicates that a stock's price is less volatile than the overall market.

Understanding Beta | Investopedia

What does a beta of 1.3 mean?

The beta for a stock describes how much the stock's price moves compared to the market. If a stock has a beta above 1, it's more volatile than the overall market. For example, if an asset has a beta of 1.3, it's theoretically 30% more volatile than the market.

Should you invest in high beta stocks?

High beta stocks have historically outperformed the market, which is why they hold great significance for investors. While beta values have been historically used to calculate stocks' volatility, it is not wise to depend entirely on the beta alone to measure the potential of a company.

What does a beta of 1.20 indicate?

Trading-Glossary. "A measure of a fund's risk, or volatility, compared to the market which is represented as 1.0. A fund with a beta of 1.20 is 20% more volatile than the market, while a fund with a beta of 0.80 would be 20% less volatile than the market."

What is the beta for Tesla?

FSD Beta enables Tesla vehicles to drive autonomously to a destination entered in the car's navigation system, but the driver needs to remain vigilant and ready to take control at all times.

What does a beta of 1.1 mean?

Each tenth of a point represents the percentage of volatility. For example, if a stock beta value is 1.1, then it is considered to have a 10 percent greater volatility than the market.

What does a beta of 0.9 mean?

A beta that is greater than 1.0 means that the fund is more volatile than the benchmark index. A beta of less than 1.0 means that the fund is less volatile than the index. In theory, if the market goes up 10%, a fund with a beta of 1.0 should go up 10%; if the market drops 10%, the fund should drop by an equal amount.

How do you interpret beta?

Interpreting Beta

A β of 1 indicates that the price of a security moves with the market. A β of less than 1 indicates that the security is less volatile than the market as a whole. Similarly, a β of more than 1 indicates that the security is more volatile than the market as a whole.

Is Amazon a high beta stock?

Despite its successes, the company remains open to competitors as well as razor-thin profit margins. The company's stock has a beta of around 1.3 and trailing P/E ratio of 138x, making it still a highly speculative investment fueled by anticipation of even greater growth ahead.

Is Apple a high beta stock?

In accordance with the recently published financial statements, Apple Inc has a Beta of 1.2. This is 13.21% higher than that of the Technology sector and 42.86% higher than that of the Consumer Electronics industry. The beta for all United States stocks is notably lower than that of the firm.

What would be the beta of an aggressive common stock?

An "aggressive" common stock would have a "beta" equal to zero. As per the capital-asset pricing model (CAPM), a security's demanded in return is similar to the risk-free rate and add a bonus equivalent to the security's beta.

Can a portfolio's beta be 1?

Since the broad market has a beta coefficient of 1, a portfolio beta of less than 1 means that the portfolio has lower systematic risk than the market and vice versa. Portfolio beta is an important input in calculation of Treynor's measure of a portfolio.

Can a portfolio have a beta of 1?

A beta between 0 and 1 signifies that it moves in the same direction as the market, but with less volatility—that is, smaller percentage changes—than the market as a whole. A beta of 1 indicates that the portfolio will move in the same direction, have the same volatility and is sensitive to systematic risk.

What does a beta of 0.8 indicate?

If the stock is more volatile than the market, its beta will be more than 1, and if it is less volatile than the market, its beta will be less than 1. For example, a stock with a beta of 0.8 would be expected to return 80% as much as the overall market.

What is range for beta?

The range of beta particles in air is ∼4 m per MeV of energy. In water the range in cm is approximately one-half the maximum beta energy when expressed in MeV. For example, the range of the energetic beta particles from yttrium-90 (maximum energy 2.27 MeV) is ∼1.15 cm in water and similarly in soft tissue.