Beta: formula and how to read it

How much the stock moves with the market; 1 moves in step. How strongly the stock's returns have followed the overall market, from the data provider. Above 1 swings more than the market, below 1 less, and below 0 tends to move the opposite way. Lower is calmer, but it isn't a score you can pick: only the Low volatility model scores it, and everywhere else it is a filter.

Stock Meadow groups it under Price trend.

Beta = covariance of the stock's returns with the market's returns ÷ variance of the market's returns (Stock Meadow uses the data provider's figure)

A stock with a beta of 1.5 has tended to rise or fall about 1.5% when the market moves 1%. The numbers are made up for illustration.

Above 1 swings more than the market, below 1 less, and below 0 tends to move the opposite way. Lower is calmer. Stock Meadow lets you filter on beta, and only the Low volatility model scores it.

When Stock Meadow ranks stocks, a lower figure scores better.

• Beta describes past co-movement and can change.
• A low beta does not mean low risk: a stock can be volatile yet move independently of the market.
• Blank when there is not enough price history to measure it.

How Stock Meadow handles gaps. Usually blank when there isn't enough price history to measure it.

Treat any single metric as one clue, and read the company's financial statements before drawing a conclusion. Stock Meadow's figures are research tools based on reported data, not investment advice.

Fixed-recipe models that score it: Low volatility.

Read about every scoring model on the scoring models page.

• Stock Volatility (60-Day): how much the price has swung lately.
• Net Debt to EBITDA: years of earnings needed to pay off debt.
• Dividend Yield: yearly dividends as a share of the price.

What does a beta of 1 mean?

A beta of 1 means the stock has tended to move in step with the market. Higher means larger swings than the market and lower means smaller ones.

Is a higher or lower Beta better?

When Stock Meadow ranks stocks, a lower figure scores better. That is a ranking convention, so read Beta alongside other measures and compare similar companies.

Why is Beta blank for some stocks?

It is usually blank when there isn't enough price history to measure it. Stock Meadow leaves the figure blank rather than guessing it.