A measure of a stock's volatility relative to the broader market.
Beta is a statistical measure that compares a stock's price volatility to the overall market. A beta of 1.0 means the stock moves in line with the market; a beta greater than 1.0 indicates the stock is more volatile than the market; a beta less than 1.0 means it's less volatile. For example, a stock with a beta of 1.5 is expected to move 50% more than the market in both directions. Beta is useful for understanding risk: high-beta stocks may offer greater upside potential but with more downside risk, making them suitable for aggressive investors. Conservative investors often prefer lower-beta stocks. Beta is calculated based on historical price movements and assumes past volatility predicts future volatility.