Beta Value
The Beta Value is a financial metric that measures the volatility of a stock or investment compared to the overall market, typically represented by an index like the S&P 500. A Beta of 1 indicates that the stock's price moves with the market, while a Beta greater than 1 suggests higher volatility, meaning the stock is likely to experience larger price swings. Conversely, a Beta less than 1 indicates lower volatility, suggesting the stock is more stable than the market.
Investors use Beta Value to assess risk and make informed decisions. For example, a high Beta stock may offer the potential for greater returns but comes with increased risk, while a low Beta stock may provide more stability but potentially lower returns. Understanding Beta helps investors align their portfolios with their risk tolerance and investment goals.