Beta

A measure of a stock's volatility relative to the overall market.

What Is Beta?

Beta measures how much a stock moves relative to the broader market (typically the S&P 500). A beta of 1.0 means the stock moves in line with the market. A beta above 1.0 means it's more volatile; below 1.0 means less volatile.

Reading Beta Values

• Beta = 1.0: The stock moves with the market.
• Beta = 1.5: The stock is 50% more volatile. If the market rises 10%, expect the stock to rise ~15%. If it falls 10%, expect ~15% decline.
• Beta = 0.5: The stock is half as volatile as the market. Typical of utilities and consumer staples.
• Beta < 0: Rare — the stock moves opposite to the market. Gold stocks sometimes exhibit negative beta.

Beta and Earnings

High-beta stocks (like NVIDIA or Tesla) tend to have more dramatic earnings reactions. A beat can send them soaring, but a miss can be devastating. On EarningsShot, understanding a stock's beta helps you gauge the potential magnitude of post-earnings moves.