IN PLAIN ENGLISH
How much a share has tended to move when the market moves. 1 moves in line; above 1 moves more; below 1, less.
WHERE YOU MEET IT
A holding's detail (N/A for most funds, which have none), and the health score's market-sensitivity measure.
WATCH OUT FOR
Low beta isn't low risk. Company-specific problems sit outside it.
FULL DEFINITION
A measure of a security's sensitivity to movements in the overall market: the covariance of its returns with the market's returns, divided by the variance of the market's returns.
EXAMPLE
With a beta of 1.5, a 10% market fall has typically come with a fall of about 15% in the share. With a beta of 0.5, about 5%.
HOW IT'S CALCULATED
Supplied by the market data provider, not calculated by the app. Beta = covariance of the share's returns with a market index's returns ÷ variance of the index's returns, measured over past prices, so it describes how the share has moved rather than how it will. Shows N/A when the provider has no beta, which is the case for most ETFs and funds and some investment trusts; a fund's detail shows Fund Beta (3Y) instead where the provider has one. Portfolio Health's market-sensitivity score is built from these figures.
EXPLAINED IN
Educational content only. It is not personal financial advice.