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Beta

Alpha Finance Academy

Beta

Alpha Finance Academy

Formula

Beta =
Cov(Stock, Market) Var(Market)
  • Cov(Stock, Market) = How much the stock moves together with the market.
  • Var(Market) = How much the market fluctuates on its own.
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Current Beta Live

Definition

Beta measures a stock's volatility relative to the market (S&P 500 = 1.0). A beta above 1.0 means the stock amplifies market moves — higher risk and potential reward. Below 1.0 means it dampens them — more stable but less upside. A negative beta means it tends to move opposite to the market. Beta helps investors assess risk and overall portfolio sensitivity.

High VolatilityBeta > 1.5
Moderate1.0 – 1.5
Low Volatility0 – 1.0
InverseBeta < 0
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