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A means of measuring the volatility of a security or portfolio of securities in comparison with the market as a whole. Beta is calculated using regression analysis. A beta of 1 indicates that the security's price will move with the market. A beta greater than 1 indicates that the security's price will be more volatile than the market. A beta less than 1 means that it will be less volatile than the market.
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Many Utilities stocks have a beta of less than 1. Conversely most high-tech NASDAQ based stocks have a beta greater than one, they offer a higher rate of return but they are also very risky. For example, if a stock's beta is 1.2 it's 20% more volatile than the market. The Beta is a good indicator of how risky a stock is.
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