What does a beta of 1.6 mean?

For example, Johnson & Johnson has a beta of 0.7, meaning that it is less volatile than the overall market, while Amazon.com has a beta of 1.6, indicating that investors should expect higher volatility.

Is 1.5 A high beta?

A high beta (greater than 1.0) indicates moderate or high price volatility. A beta of 1.5 forecasts a 1.5% change in the return on an asset for every 1% change in the return on the market.

What does a 1.5 beta mean?

A beta of 1.5 means that a stock's excess return is expected to move 1.5 times the market excess returns. E.g., if market excess return is 10%, then we expect, on average, the stock return to be 15%.

What does a beta of 1.8 mean?

Beta indicates how volatile a stock's price is in comparison to the overall stock market. A beta greater than 1 indicates a stock's price swings more wildly (i.e., more volatile) than the overall market. A beta of less than 1 indicates that a stock's price is less volatile than the overall market.

What is a good range for beta?

Key Takeaways. Beta is a concept that measures the expected move in a stock relative to movements in the overall market. A beta greater than 1.0 suggests that the stock is more volatile than the broader market, and a beta less than 1.0 indicates a stock with lower volatility.

What is Beta? - MoneyWeek Investment Tutorials

What is a high beta value?

A beta that is greater than 1.0 indicates that the security's price is theoretically more volatile than the market. For example, if a stock's beta is 1.2, it is assumed to be 20% more volatile than the market. Technology stocks and small cap stocks tend to have higher betas than the market benchmark.

What's a high beta stock?

High beta stocks are those that are positively correlated with returns of the S&P 500, but at an amplified magnitude. Because of this amplification, these stocks tend to outperform in bull markets, but can greatly underperform in bear markets.

What does a beta of 1.3 mean?

The beta for a stock describes how much the stock's price moves compared to the market. If a stock has a beta above 1, it's more volatile than the overall market. For example, if an asset has a beta of 1.3, it's theoretically 30% more volatile than the market.

What are the best high beta stocks?

What does a beta of 1.1 mean?

Each tenth of a point represents the percentage of volatility. For example, if a stock beta value is 1.1, then it is considered to have a 10 percent greater volatility than the market.

What is a safe beta for stocks?

Stocks with a value greater than 1 are more volatile than the market (meaning they will generally go up more than the market goes up, and go down more than the market goes down). Stocks with a beta of less than 1 have a smoother ride as their moves are more muted than the market's.

How do you interpret beta?

Interpreting Beta

A β of 1 indicates that the price of a security moves with the market. A β of less than 1 indicates that the security is less volatile than the market as a whole. Similarly, a β of more than 1 indicates that the security is more volatile than the market as a whole.

What is the beta for Tesla?

FSD Beta enables Tesla vehicles to drive autonomously to a destination entered in the car's navigation system, but the driver needs to remain vigilant and ready to take control at all times.

What is high systematic risk?

Systematic risk, or total market risk, is the volatility that affects the entire stock market across many industries, stocks, and asset classes. Systematic risk affects the overall market and is therefore difficult to predict and hedge against.

Are high beta stocks good for trading?

High beta stocks are very good bet for Intraday trading – Since the movement is high, trading with caution is recommended. Example: For a stock having a beta 2 indicates that if the sensex moves by 1 point the stock is likely to move by 2 points.

Is Amazon a high beta stock?

Given that Amazon.com's share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does a beta of 0.6 mean?

Teva Pharmaceutical Industry's 2.49 beta, for example, indicates that the stock is expected to be more than twice as volatile than the market, while Intel's beta of 0.6 means the stock will typically move at a rate that's only about half that the broader market (data from Yahoo Finance, June 13, 2019).

What company has the highest beta?

What is an example of a high beta?

A high beta index refers to a market index made up of stocks with higher-than-average volatility compared to the overall stock market. Examples include the S&P 500 High Beta Index, the TSX Composite High Beta Index, the Hang Seng High Beta Index, and the S&P Emerging Markets High Beta Index.

What does a beta of 0.70 mean?

Anything less than 1 represents an asset less volatile than the market, while greater than 1 suggests a more volatile asset. For example, a beta of 1.2 means the asset is 20% more volatile than the market. Conversely, a beta of 0.70 is theoretically 30% less volatile than the market.

What does beta 2.0 indicate?

A stock with a beta of more than one is more volatile than the overall index. For example, a beta of 2.0 implies that the stock will move twice as much as the market. A stock with a beta of exactly one is theoretically exactly as volatile as the overall market.

What is a 36 month beta?

Stock beta ratings are a commonly used measure of stock-market volatility. To calculate a stock beta, a market index like the S&P/TSX Composite Index is assigned a beta of 1.0. The historical volatility of different stocks relative to the index is then measured using either a 36-month or 60-month regression analysis.

What is a high negative beta?

In general, high beta means high risk, but also offers the possibility of high returns if the stock turns out to be a good investment. A negative beta coefficient, on the other hand, means the investment moves opposite of market direction.