---
title: "Definition of Beta"
url: https://signalscreener.fr/definition/beta/
markdown_url: https://signalscreener.fr/definition/beta.md
description: "Beta measures a stock's volatility relative to the market."
type: glossary-definition
site: Signal Screener
language: en
keywords:
  - "Beta"
translations:
  es: https://signalscreener.fr/es/definition/beta.md
  fr: https://signalscreener.fr/fr/definition/beta.md
  pt: https://signalscreener.fr/pt/definition/beta.md
---

# Beta

## What is Beta?

Beta measures a stock's volatility relative to the market. Beta of 1 means it moves with the market. Beta > 1 means more volatile. Beta < 1 means less volatile.

## Think of it like this

Imagine boats on the ocean (market). A speedboat (high beta) bounces dramatically with waves. A cruise ship (low beta) stays steadier. A submarine (negative beta) moves opposite to waves!

## Formula

```
Beta = Covariance(Stock, Market) / Variance(Market)
```

- **Covariance**: How stock moves with market
- **Variance**: Market volatility

## Why it matters

- Measures risk and volatility
- High beta = higher potential returns and losses
- Low beta = more stability, less dramatic swings
- Important for portfolio diversification

## What's a good value?

| Range | Rating | What it means |
|---|---|---|
| < 0.5 | Very Low | Much less volatile than market |
| 0.5-1.0 | Low | Less volatile than market |
| 1.0 | Market | Moves with the market |
| 1.0-1.5 | High | More volatile than market |
| > 1.5 | Very High | Much more volatile |

## Real-world example

Tesla beta: 1.8 - swings wildly. Utilities beta: 0.5 - steady and boring. Gold miners beta: sometimes negative - hedge against market. Tech stocks: 1.2-1.5 - generally volatile.

---

This is educational content, not financial advice.

Source: [Definition of Beta](https://signalscreener.fr/definition/beta/) on Signal Screener. Free to quote and cite with attribution and a link to that URL, which is the canonical one.

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