Estimate a stock's beta — its sensitivity to market movements (systematic risk).
Beta measures a stock's volatility relative to the overall market. It's the key input for the CAPM (Capital Asset Pricing Model) to calculate expected returns.
| Beta | Meaning | Example Stocks |
|---|---|---|
| β > 1.5 | High volatility — amplifies market moves | Tech growth, biotech |
| 1.0 – 1.5 | Moderate — moves more than market | Most tech stocks |
| β = 1.0 | Moves exactly with the market | S&P 500 index fund |
| 0.5 – 1.0 | Less volatile than market | Utilities, consumer staples |
| β < 0.5 | Low volatility — defensive | Bonds, gold miners |
| β < 0 | Moves opposite to market | VIX-related, some gold |