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Glossary
Returns & risk

Beta

How much a stock moves relative to the market as a whole.

Beta of 1 means the stock tends to move with the index. Beta of 1.8 means it swings 80% harder, in both directions. Beta of 0.5 means it is half as jumpy.

Beta measures co-movement, not danger. A stock can have a low beta and be about to go bankrupt. It is a description of past price behaviour, and it is unstable: a company's beta changes as its debt and business mix change.

Figure

Volatile is not the same as risky

Volatile, fineCalm, ruined

The jumpy line ends higher. The calm one quietly walks to zero. Volatility is what you feel; risk is what actually takes your money.

Why it matters

It is the standard input for the cost of equity in a DCF, and a rough guide to how bumpy the ride will be.

The mistake everyone makes

Treating low beta as safe. Beta says nothing about the risk of permanent loss.

Related terms

Volatility
How much a price swings about. Not the same thing as risk.
Alpha
Return above what you would expect for the risk you took.
WACC
The blended rate a company must beat to be worth anything.

See Beta on a real company

SteadyShares pulls this straight from the filings for 1,100+ companies, alongside moat scores, DCF fair value and peer comparison. Free to look around.

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