Finding Stock Risk Measures: Focus on Beta

Key Points About Beta

Beta is the most accessible risk measure for individual stocks
It measures how a stock reacts to overall market movements
Beta > 1: Stock is more volatile than the market
Beta < 1: Stock is less volatile than the market
Beta = 1: Stock moves in line with the market

Where to Find Beta

Yahoo Finance

Beta is displayed on the summary page for any stock. Yahoo Finance provides a 5-year monthly beta calculation.

Investing.com

Scroll down on the stock's quote page to find beta. This platform offers excellent global coverage for international stocks.

Finviz

Scroll past the chart to find beta along with additional metrics like ATR (Average True Range) and their proprietary volatility measure.

Example Comparison

Company	Sector	Beta	ATR (Finviz)	Risk Profile
Xcel Energy (XEL)	Utilities	0.27	1.46	Very low volatility, much more stable than market
Kraft Heinz (KHC)	Food Manufacturing	1.14	1.08	Slightly more volatile than market
Amazon (AMZN)	E-commerce/Web Services	1.13	Higher range	Moderately more volatile than market
Tesla (TSLA)	Electric Vehicles	2.03	38	Highly volatile, amplifies market movements

Interesting Observations

Utility company (Xcel) has very low beta (0.27) as expected for this defensive sector
Surprisingly, Kraft Heinz (food manufacturer) has a slightly higher beta (1.14) than Amazon (1.13)
Tesla has the highest beta (2.03), meaning when the market moves 1%, Tesla tends to move about 2% in the same direction
During market downturns, high beta stocks like Tesla will typically fall more sharply

Choosing Stocks Based on Risk Tolerance

Low Risk Tolerance

Consider stocks with low beta like utilities

Example: Xcel Energy (Beta: 0.27)

These stocks tend to be more stable during market volatility.

Medium Risk Tolerance

Consider stocks with beta near 1

Example: Amazon (Beta: 1.13)

These stocks generally move in line with the broader market.

High Risk Tolerance

Consider stocks with high beta

Example: Tesla (Beta: 2.03)

These stocks offer growth potential but with higher volatility in both directions.

Important Reminder

Higher beta doesn't mean "better" investment - it simply indicates more volatility in both directions. Your investment choices should align with your personal risk tolerance, investment timeline, and financial goals.