Web Trader MT5
A statistical measure of how a stock moves relative to the broader market. The market itself has a beta of 1.0 by definition. A stock with a beta of 1.5 tends to move 1.5 times as much as the market in either direction; a stock with a beta of 0.5 moves half as much. Negative beta; rare but real for assets like gold-mining stocks at certain points; means the stock tends to move opposite the market.
Beta is computed from historical price data, usually using daily or weekly returns over a year or two, and it forms one of the inputs into the Capital Asset Pricing Model. The number is useful but limited. It changes over time. It says nothing about absolute risk, only relative risk. And it assumes the past correlation will hold in the future, which is exactly when you’d want it not to.
Example: Tesla’s beta has often run above 2.0 during periods of high retail trading interest; it amplifies whatever the market does. Procter & Gamble, by contrast, runs around 0.4. A diversified portfolio mixing the two manages overall volatility through beta differences.
