Beta is the most common and easily accessible measure of investment risk. It measures the volatility of a security (stock, mutual fund, or ETF) relative to a broader market index like the S&P 500 or Nifty 50.
The market index is always assigned a beta of 1.0, which serves as the baseline for comparison.
| Beta Range | Interpretation |
|---|---|
| 0 to 1.0 | Less volatile than the market. Moves in the same direction but with smaller swings. |
| 1.0 | Mirrors the market's volatility. Moves exactly with the market. |
| Greater than 1.0 | More volatile than the market. Larger swings both up and down. |
| Negative | Rare case. Moves in the opposite direction of the market. |
If a stock has a beta of 2.0 and the market rises 10%, the stock would rise by 20%.
If the market falls 6%, the stock would fall by 12%.
If a stock has a beta of 0.5 and the market rises 10%, the stock would rise by 5%.
If the market falls 10%, the stock would fall by 5%.
| Company/Fund | Type | Beta |
|---|---|---|
| National Grid (UK) | Utility | 0.33 |
| Fidelity IT Services | Technology Mutual Fund | 1.11 |
| Apple | Technology Company | 1.23 |
| Yatra Online | India-based Travel Services | 2.08 |