Beta

Beta quantifies how sensitive a stock's price movements are compared to a benchmark index (usually the S&P 500). A beta of 1.0 means the stock tends to move exactly with the market. A beta above 1.0 means it amplifies market moves — a stock with a beta of 1.5 typically rises 15% when the market rises 10%, but also falls 15% when the market falls 10%. A beta below 1.0 indicates a more defensive stock.

Negative beta is rare but exists — gold miners and inverse ETFs sometimes have negative beta, meaning they tend to move opposite to the broader market. Beta is calculated over a historical period (usually 2–5 years) and may not predict future volatility.

Example: Tesla has historically carried a beta of around 1.8–2.2, making it highly sensitive to market swings. Johnson & Johnson typically has a beta near 0.5, reflecting its defensive, healthcare-focused business.

When building your Portfolio Tracker on BMInsider, monitoring the blended beta of your holdings can help you understand your overall risk exposure before a market downturn hits.