Risk
Beta
A measure of a stock's volatility relative to the overall market. A beta above 1 means the stock tends to move more than the market.
Example
A stock with a beta of 1.5 would be expected to move about 15% if the market moves 10% — amplified in both directions, up and down.
Common Misconception
Beta measures relative volatility, not overall risk or quality — a beta below 1 doesn't automatically mean an investment is "safe," just that it has historically swung less than the broad market.
Why It Matters
Beta is one input into deciding how much of a volatile, high-beta stock to hold alongside more stable positions when building a portfolio that matches your actual risk tolerance.