ATLASBeta
Investing glossary · Risk and statistics
A measure of how strongly a stock tends to move with the overall market: above 1 means bigger swings, below 1 smaller ones.
Definition
Beta measures a stock's sensitivity to the market. A beta of 1 means the stock has tended to move in line with the market; 1.5 means it has tended to move 50% more, in both directions; 0.5 means half as much. A negative beta would mean it tends to move against the market.
Beta is estimated from past returns, so it describes history, not a promise, and it only captures market-related risk. A stock can have a low beta and still be risky for reasons of its own, like a single product or a lawsuit. Beta is a building block of the classic CAPM model of expected returns.
Formula
β = Cov(R_stock, R_market) ÷ Var(R_market)
Cov(R_stock, R_market) is the covariance between the stock's and the market's returns; Var(R_market) is the variance of the market's returns.
Worked example
NVIDIA has a beta of 2.22: if the market fell 10%, a stock with that beta would tend to fall about 22%. Coca-Cola has a beta of 0.32, so the same 10% market drop would tend to cost it about 3%.
The two stocks have very different betas, which is why a portfolio of low-beta stocks usually feels calmer in a falling market than one of high-beta stocks.
How ATLAS uses it
ATLAS shows beta on the stock page and explains it in plain words ("moves more than the market"). It is one of the numbers on the risk screen along with volatility, correlation and drawdown.
Related in ATLAS: Stock analysis →Browse all ATLAS tools →See it on a real stock
The example above uses these companies. Open their pages for the full numbers:
Frequently asked questions
What is a good beta?
It depends on your goal. Lower beta means calmer swings with the market; higher beta means bigger gains in rising markets and bigger losses in falling ones.
Does beta change?
Yes. It is computed from a window of past data and moves as the company and the market change.
Related terms
Put the idea to work on your own stocks
Open any company in ATLAS to see its fair value, its odds of rising and its risk numbers side by side.
Try ATLAS →Not investment advice. ATLAS estimates are produced by statistical models from public data; they can be wrong and past performance does not predict future results. Consider your own situation before investing. Disclaimer