meaning of Beta Value

Beta Value meaning in Finance Dictionary

A measurement associated with the movement for the price of a specific stock weighed against the activity regarding the market in general within the exact same duration. If a stock has actually a beta value of lower than 1, it is thought to be reduced danger assuming it has a beta of greater than 1, it is viewed as much more high-risk, but there is a higher opportunity that it'll outperform the market. Low beta shares are often called defensive stocks, including food merchants, and large beta shares tend to be more cyclical, in areas such as for example customer durables. Betas are often plotted on a scatter diagram which shows the movement of this market all together plus the return on a particular stock every day, weekly, month-to-month or quarterly. Keep in mind that betas for specific company do change, so that you can't depend on historical betas as a guide to future betas, and a stock's beta differs according to the course of the market - some shares tend to be riskier in a falling market.