What does it mean when beta is 1?
A beta of 1 indicates that the security’s price tends to move with the market. A beta greater than 1 indicates that the security’s price tends to be more volatile than the market. A beta of less than 1 means it tends to be less volatile than the market.
What does a stock 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 a good beta score?
Beta is a concept that measures the expected move in a stock relative to movements in the overall market. A beta greater than 1.0 suggests that the stock is more volatile than the broader market, and a beta less than 1.0 indicates a stock with lower volatility.
Is the market beta always 1?
The beta of market portfolio is always one. Because beta measures the sensitivity of an asset to the movements of the overall market portfolio, and the market portfolio obviously moves precisely with itself, its beta is one.
Is a beta of 1 GOOD?
A beta of 1 indicates that the security’s price tends to move with the market. A beta greater than 1 indicates that the security’s price tends to be more volatile than the market. A beta of less than 1 means it tends to be less volatile than the market.
What does a beta less than 1 mean?
High And Low Beta Value
A stock that is less volatile, or has fewer price swings, than the aggregate market has a beta value of less than one. A low beta value typically means that the stock is considered less risky, but will likely offer low returns as well.
What is considered a low beta?
A beta value that is less than 1.0 means that the security is theoretically less volatile than the market. Including this stock in a portfolio makes it less risky than the same portfolio without the stock. For example, utility stocks often have low betas because they tend to move more slowly than market averages.
What does a beta of 0 mean?
A beta value of 0 means the stock’s performance is uncorrelated with the market. You may also see beta values below 0, indicated with a negative sign. This means that the stock has a tendency to move in the opposite direction from the market as a whole.