Beta
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Correlation
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Interpretation
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When Should You Use This?
Use beta to understand how a stock moves relative to the market. Beta > 1 means the stock amplifies market moves. Beta < 1 means it dampens them. Essential for portfolio construction and CAPM-based valuation.
How It Works
1
Enter Returns
Paste periodic returns (daily, weekly, or monthly) for both the stock and a market index (e.g., S&P 500). Use at least 30 data points.
2
Read Beta
Beta 1.0 = moves with the market. Beta 1.5 = moves 50% more. Beta 0.7 = moves 30% less. Negative beta = moves opposite.
3
Apply It
Use beta for position sizing (reduce size for high-beta stocks) and for expected return calculations (CAPM).
Frequently Asked Questions
Beta measures a stock's sensitivity to market movements. A beta of 1.2 means if the market rises 10%, the stock tends to rise 12%. If the market falls 10%, the stock tends to fall 12%.
It depends on your goals. Conservative investors prefer beta < 1 (utilities, healthcare). Aggressive traders prefer beta > 1 (tech, small caps). Beta near 0 = uncorrelated (gold, some alternatives).
Beta measures systematic (market) risk only. It doesn't capture company-specific risks like lawsuits, management changes, or product failures. Total risk includes both.
CAPM: Expected Return = Risk-Free Rate + Beta x (Market Return - Risk-Free Rate). Higher beta = higher expected return to compensate for more risk.
Yes, but it's rare. Gold miners and some inverse ETFs can have negative beta, meaning they tend to rise when the market falls.