Beta

Beta is a measure of a stock's volatility in relation to the overall market. By definition, the market has a beta of 1.0, and individual stocks are ranked according to how much they deviate from the market.

A stock with a beta greater than 1.0 is considered more volatile than the market, while a stock with a beta less than 1.0 is less volatile. For example, if a stock's beta is 1.2, it's theoretically 20% more volatile than the market.

Beta is particularly useful for investors to understand the risk level of individual stocks within their portfolio and for calculating the expected return using the Capital Asset Pricing Model (CAPM).