By Alvin Alexander. Last updated: June 4, 2016
This information about the term “Beta” comes from the Investopedia website:
1) You can think of beta as the tendency of a security's returns to respond to swings in the market.
2) A beta < 1 means that the security will be less volatile than the market.
3) A beta > 1 indicates that the security's price will be more volatile than the market.
4) For example, if a stock’s beta is 1.2, it’s theoretically 20% more volatile than the market.
5) Many utilities stocks have a beta < 1. Conversely, most high-tech Nasdaq-based stocks have a beta > 1.
As an example of this, I’m currently looking at a REIT that has a Beta of 0.66, while Apple’s Beta is 1.44.