The beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the benchmark as a whole. Beta is used in the capital asset pricing model (CAPM), a model that calculates the expected return of an asset based on its beta and expected market returns.
 

A beta of 1 indicates that the portfolio’s price will move with the market. A beta of less than 1 means that the portfolio will be less volatile than the market. A beta of greater than 1 indicates that the security's price will be more volatile than the market.

Back