Beta
A measure of a stock's volatility relative to the overall market (S&P 500 = 1.0). How much the stock moves when the market moves.
Formula
β = Covariance(Stock, Market) / Variance(Market)
How to Interpret
Beta 1.0 = moves with the market. Beta 1.5 = 50% more volatile. Beta 0.5 = half as volatile. Negative beta (rare) means the stock moves opposite to the market. Tech stocks typically have beta > 1, utilities < 1.
Why It Matters
Beta helps you understand portfolio risk. A portfolio of high-beta stocks will amplify market swings. It's also used in CAPM (Capital Asset Pricing Model) to calculate expected returns and cost of equity.
R40 does not publish Beta per company. This entry explains the measure; the metrics R40 tracks and ranks are listed on the indicators index.