◈ GLOSSARY · INVESTING
Beta.
A definition, in plain English — with the books that teach it.
Reviewed by ClearValue Editorial Team · Jun 27, 2026
◈ DEFINITION
What it means
Definition
Beta measures how much a stock tends to move relative to the broader market. A beta of 1.0 means the stock historically moves roughly in line with the S&P 500; 1.5 means it tends to swing 50% more; 0.5 means it moves about half as much. Beta is a backward-looking statistic — it describes past volatility, not future risk.
◈ IN PRACTICE
Example
If the S&P 500 falls 10% and a stock has a beta of 1.4, you'd expect it to drop around 14% all else equal. A utility with a beta of 0.6 might only fall around 6%. Real results vary because beta only captures market-related moves.
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