High Beta Stocks

Beta is the result of a calculation that measures the relative volatility of a stock in correlation to a particular standard. For U.S. stocks that standard is usually, but not always, the S&P 500. Beta is a form of regression analysis and it can be useful for investors regardless of their risk tolerance. Beta is considered one of the few data points that can be beneficial for practitioners of fundamental analysis and technical analysis. This page lists stocks that have unusually high beta calculations. For example, a beta of 2.0 means a stock moves twice as much as the S&P 500. More about high beta stocks.

CompanyBetaPE RatioMarket CapCurrent PricePrice ChangeVolumeAverage VolumeIndicator(s)
Marathon Digital logo
MARA
Marathon Digital
4.4945.78$2.64 billion$26.55flat7.22 million27.59 million
Overstock.com logo
OSTK
Overstock.com
4.4446.72$3.88 billion$90.16flat785,2862.49 million
Rattler Midstream logo
RTLR
Rattler Midstream
4.3219.86$1.74 billion$11.72flat87,113291,881Increase in Short Interest
News Coverage
Western Midstream Partners logo
WES
Western Midstream Partners
3.9410.17$9.28 billion$22.47flat756,3211.61 millionDecrease in Short Interest
News Coverage
OneWater Marine logo
ONEW
OneWater Marine
3.918.61$665.93 million$44.28flat79,84489,066News Coverage
Gap Up
Altus Midstream logo
ALTM
Altus Midstream
3.9024.57$1.11 billion$68.54flat22,46453,146Gap Up
Samsung Electronics logo
SSNLF
Samsung Electronics
3.8916.49$5.71 billion$44.20flat0100
Paramount Resources logo
PRMRF
Paramount Resources
3.8514.79$1.53 billion$11.39flat2,30014,330Increase in Short Interest
Sasol logo
SSL
Sasol
3.8120.57$10.67 billion$16.87flat281,832744,727Decrease in Short Interest
Denbury logo
DEN
Denbury
3.78195.53$3.68 billion$73.49flat1.54 million874,714Analyst Report
Increase in Short Interest
News Coverage
Village Farms International logo
VFF
Village Farms International
3.65536.77$871.18 million$10.73flat840,7682.52 million
ASOS logo
ASOMY
ASOS
3.6044.30$7.17 billion$71.77flat9671,702Decrease in Short Interest
DCP Midstream logo
DCP
DCP Midstream
3.5626.98$6.41 billion$30.76+2.3%776,518929,146
Noble Midstream Partners logo
NBLX
Noble Midstream Partners
3.469.00$1.37 billion$15.21flat0883,457
Helix Energy Solutions Group logo
HLX
Helix Energy Solutions Group
3.4528.76$910.37 million$6.04flat1.93 million2.10 million
Camping World logo
CWH
Camping World
3.368.34$3.49 billion$39.38flat1.50 million1.40 million
Core Laboratories logo
CLB
Core Laboratories
3.31113.83$2.21 billion$47.81flat353,190487,752
Antero Midstream logo
AM
Antero Midstream
3.3114.41$5.02 billion$10.52flat2.67 million5.21 millionAnalyst Downgrade
Vermilion Energy logo
VET
Vermilion Energy
3.195.80$1.42 billion$8.76flat1.22 million2.49 millionIncrease in Short Interest
News Coverage
Resolute Forest Products logo
RFP
Resolute Forest Products
3.1911.35$1.04 billion$13.17flat1.88 million862,958High Trading Volume
News Coverage
Gap Up
Wayfair logo
W
Wayfair
3.1470.27$33.68 billion$323.22flat818,9201.79 million
Herc logo
HRI
Herc
3.0728.66$3.14 billion$106.05flat284,689227,614
Targa Resources logo
TRGP
Targa Resources
3.0554.57$10.73 billion$46.93flat1.93 million2.30 millionInsider Selling
BRP logo
DOOO
BRP
3.0210.65$6.47 billion$76.37flat76,554111,157Dividend Increase
Decrease in Short Interest
CURO Group logo
CURO
CURO Group
3.0011.47$735.22 million$17.66flat377,983336,361Insider Selling
Decrease in Short Interest
News Coverage
Delek Logistics Partners logo
DKL
Delek Logistics Partners
2.9810.51$1.92 billion$44.25flat57,46377,686
G-III Apparel Group logo
GIII
G-III Apparel Group
2.9875.59$1.68 billion$34.77flat426,627508,207Earnings Announcement
Analyst Report
Analyst Revision
Gap Down
Boot Barn logo
BOOT
Boot Barn
2.9637.95$2.22 billion$75.90flat291,121518,272Analyst Report
GrowGeneration logo
GRWG
GrowGeneration
2.91169.52$2.49 billion$42.38flat1.13 million2.26 millionInsider Selling
Tupperware Brands logo
TUP
Tupperware Brands
2.887.63$1.22 billion$24.49flat460,920866,287Increase in Short Interest
Gap Down
Big 5 Sporting Goods logo
BGFV
Big 5 Sporting Goods
2.887.81$651.09 million$29.21flat871,3591.24 millionGap Down
eXp World logo
EXPI
eXp World
2.84152.30$5.18 billion$35.79flat935,0561.93 millionInsider Selling
News Coverage
Babcock & Wilcox Enterprises logo
BW
Babcock & Wilcox Enterprises
2.8150.00$728.68 million$8.50flat516,6461.23 millionNews Coverage
Gap Down
Brinker International logo
EAT
Brinker International
2.803,049.02$2.79 billion$60.95flat703,3251.05 millionAnalyst Report
Insider Selling
News Coverage
Oasis Midstream Partners logo
OMP
Oasis Midstream Partners
2.808.57$1.43 billion$29.41flat249,157198,463Increase in Short Interest
Gap Down
Realogy logo
RLGY
Realogy
2.7915.53$2.08 billion$17.86flat523,4531.50 million
R. R. Donnelley & Sons logo
RRD
R. R. Donnelley & Sons
2.774.64$509.73 million$7.06flat2.33 million1.64 millionInsider Buying
Gap Down
Freddie Mac logo
FMCC
Freddie Mac
2.7512.58$1.55 billion$2.39flat1.01 million1.78 million
CONSOL Energy logo
CEIX
CONSOL Energy
2.7565.11$605.44 million$17.58flat413,361398,605News Coverage
Premier Foods logo
PRRFY
Premier Foods
2.7419.77$1.32 billion$7.71flat14,347
Ebix logo
EBIX
Ebix
2.7112.67$1.14 billion$36.74flat526,950617,104Gap Down
Hovnanian Enterprises logo
HOV
Hovnanian Enterprises
2.691.18$581.43 million$94.51flat117,964126,625
Navios Maritime Partners logo
NMM
Navios Maritime Partners
2.684.46$583.90 million$29.46flat522,210488,794Decrease in Short Interest
News Coverage
Gap Down
Revolve Group logo
RVLV
Revolve Group
2.6755.73$4.14 billion$57.40flat786,9411.17 millionInsider Selling
Gap Down
Tronox logo
TROX
Tronox
2.673.55$3.58 billion$23.38flat1.24 million1.49 millionIncrease in Short Interest
YETI logo
YETI
YETI
2.6347.02$8.29 billion$94.97flat778,3561.50 millionGap Down
Constellium logo
CSTM
Constellium
2.6341.81$2.81 billion$20.07flat1.21 million1.01 million
Alliance Data Systems logo
ADS
Alliance Data Systems
2.6311.65$5.56 billion$111.76flat1.07 million932,458
Tenet Healthcare logo
THC
Tenet Healthcare
2.6218.44$7.35 billion$68.78flat602,9581.03 million
Silvergate Capital logo
SI
Silvergate Capital
2.6257.36$2.44 billion$96.36flat1.08 million1.49 millionInsider Selling
Analyst Revision
Gap Up
Conn's logo
CONN
Conn's
2.618.73$851.38 million$29.00flat384,357384,943Earnings Announcement
Analyst Upgrade
Insider Selling
Gap Down
Magnolia Oil & Gas logo
MGY
Magnolia Oil & Gas
2.6132.21$3.67 billion$15.14flat1.34 million2.11 million
Alpha and Omega Semiconductor logo
AOSL
Alpha and Omega Semiconductor
2.6021.39$786.91 million$30.16flat210,415309,385
Cerence logo
CRNC
Cerence
2.59531.27$4.42 billion$116.88flat270,063572,266Insider Selling
News Coverage
The Pennant Group logo
PNTG
The Pennant Group
2.5983.57$1.09 billion$38.44flat124,028121,543Analyst Upgrade
News Coverage
Gap Down
Taseko Mines logo
TGB
Taseko Mines
2.5848.01$679.65 million$2.40flat1.34 million3.01 million
Sonic Automotive logo
SAH
Sonic Automotive
2.5710.15$1.94 billion$46.69flat111,399298,476News Coverage
Resideo Technologies logo
REZI
Resideo Technologies
2.5741.36$4.46 billion$31.02flat300,574878,168
Lands' End logo
LE
Lands' End
2.5533.53$1.14 billion$34.54flat90,853212,634Analyst Upgrade
Altra Industrial Motion logo
AIMC
Altra Industrial Motion
2.5532.86$4.28 billion$66.04flat199,061365,459News Coverage
At Home Group logo
HOME
At Home Group
2.539.12$2.39 billion$36.40flat1.63 million1.91 millionDecrease in Short Interest
Micro Focus International logo
MFGP
Micro Focus International
2.524.62$2.39 billion$7.12flat252,187881,566Analyst Downgrade
Energy Transfer logo
ET
Energy Transfer
2.519.11$30.55 billion$11.30flat12.78 million20.70 million
JELD-WEN logo
JELD
JELD-WEN
2.5123.54$2.71 billion$27.07flat398,788650,311
RH logo
RH
RH
2.5071.92$14.33 billion$682.52flat939,798534,149Earnings Announcement
Analyst Upgrade
Analyst Revision
News Coverage
Gap Up
The Lovesac logo
LOVE
The Lovesac
2.49105.05$1.37 billion$91.39flat353,773404,347Earnings Announcement
Analyst Report
News Coverage
Gap Down
Enable Midstream Partners logo
ENBL
Enable Midstream Partners
2.4948.50$4.23 billion$9.70flat840,5661.29 million
Lumber Liquidators logo
LL
Lumber Liquidators
2.4911.06$651.63 million$22.45flat279,542514,530Decrease in Short Interest
News Coverage
Gap Up
Atkore logo
ATKR
Atkore
2.4812.49$3.48 billion$74.08flat371,329518,611
Worley logo
WYGPY
Worley
2.4816.78$4.73 billion$9.06flat1,1575,447Increase in Short Interest
News Coverage
Gap Up
WESCO International logo
WCC
WESCO International
2.4876.55$5.57 billion$111.00flat230,342442,781Analyst Upgrade
Forterra logo
FRTA
Forterra
2.4716.50$1.56 billion$23.43flat493,798575,122
Welbilt logo
WBT
Welbilt
2.47219.73$3.43 billion$24.17flat2.15 million2.73 million
The Trade Desk logo
TTD
The Trade Desk
2.47123.42$28.54 billion$599.81flat611,428936,471Insider Selling
News Coverage
XPEL logo
XPEL
XPEL
2.46106.13$2.49 billion$90.21flat93,502236,517Gap Down
Celestica logo
CLS
Celestica
2.4514.33$1.07 billion$8.31flat124,066309,869Gap Up
Funko logo
FNKO
Funko
2.4561.61$1.17 billion$23.41flat650,4121.78 millionInsider Selling
Patrick Industries logo
PATK
Patrick Industries
2.4415.18$1.92 billion$80.90flat88,361146,150
Builders FirstSource logo
BLDR
Builders FirstSource
2.4312.86$9.08 billion$43.86flat3.05 million2.36 millionAnalyst Report
News Coverage
Cactus logo
WHD
Cactus
2.4282.06$3.10 billion$41.03flat284,133442,351
Square logo
SQ
Square
2.40308.93$99.88 billion$219.34flat7.53 million10.50 millionInsider Selling
Digital Turbine logo
APPS
Digital Turbine
2.38129.65$6.61 billion$73.90flat2.30 million3.60 millionGap Down
Thor Industries logo
THO
Thor Industries
2.3716.30$6.32 billion$114.10flat1.06 million691,917Earnings Announcement
Unusual Options Activity
Analyst Revision
News Coverage
Big Lots logo
BIG
Big Lots
2.363.99$2.41 billion$68.80flat639,5171.05 millionGap Down
Meredith logo
MDP
Meredith
2.3524.82$1.92 billion$41.95flat298,928512,706Analyst Upgrade
Gap Up
Capstone Mining logo
CSFFF
Capstone Mining
2.3213.42$1.82 billion$4.43flat78,395120,974News Coverage
Plains All American Pipeline logo
PAA
Plains All American Pipeline
2.3118.32$8.73 billion$12.09flat4.00 million4.82 millionAnalyst Report
Ichor logo
ICHR
Ichor
2.3131.16$1.55 billion$55.16flat89,213362,724
StoneCo logo
STNE
StoneCo
2.30111.09$19.55 billion$63.32flat1.33 million2.20 millionAnalyst Report
ReneSola logo
SOL
ReneSola
2.29157.50$659.12 million$9.45flat2.53 million3.38 millionAnalyst Report
Increase in Short Interest
William Hill logo
WIMHY
William Hill
2.2827.78$3.94 billion$15.00flat8,67332,809
American Woodmark logo
AMWD
American Woodmark
2.2724.23$1.43 billion$83.82flat102,59298,126Decrease in Short Interest
The Children's Place logo
PLCE
The Children's Place
2.2777.18$1.43 billion$97.25flat496,638570,724Gap Down
Lincoln National logo
LNC
Lincoln National
2.2619.80$12.89 billion$67.71flat697,0601.50 millionAnalyst Downgrade
News Coverage
Equitrans Midstream logo
ETRN
Equitrans Midstream
2.2611.25$4.13 billion$9.56flat3.09 million4.97 million
H&E Equipment Services logo
HEES
H&E Equipment Services
2.26148.18$1.23 billion$34.08flat124,044221,189Decrease in Short Interest
Hess Midstream logo
HESM
Hess Midstream
2.2618.71$651.24 million$26.01flat147,308211,206Increase in Short Interest
News Coverage
TechnipFMC logo
FTI
TechnipFMC
2.2513.69$4.57 billion$10.13flat4.02 million9.72 million
Ladder Capital logo
LADR
Ladder Capital
2.2539.06$1.54 billion$12.11flat579,819935,014Insider Selling
News Coverage
Genesco logo
GCO
Genesco
2.2410.42$932.21 million$62.33flat77,712149,591Gap Down
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Using High Beta Stocks to Maximize Your Investing Profits

What Does Beta Mean in Stock Selection?

fluctuating stock prices We often hear the word beta in the context of “beta test”. It’s a way of testing something (e.g. a software program) in a real-world situation to iron out any glitches before rolling it out to the public.

The word beta in the context of investment strategy means something different—or does it? 

Understanding beta can help investors understand why a company may be performing or underperforming, in addition to giving a measure of its risk, relative to Wall Street. In this way, beta can help investors predict how a stock is likely to perform before they buy the stock.

Beta is the result of a calculation that measures the relative volatility of a stock in correlation to a particular standard. For U.S. stocks, that standard is usually (but not always) the S&P 500. Beta can also be used by investors to evaluate a particular stock’s expected rate of return, particularly when using the Capital Asset Pricing Model (CAPM).

Beta is a form of regression analysis, and it can be useful for investors regardless of their risk tolerance. Beta is considered one of the few data points that can be beneficial for practitioners of fundamental analysis and technical analysis. Investors who tend to analyze stocks using fundamental analysis will use beta along with the price-to-earnings ratio, shareholders equity, debt-to-equity ratio, and other factors. Technical analysts will use beta as an indicator of stocks that offer the price movement they are seeking. They will use beta along with other indicators, such as average daily trading volume (ADTV) and a stock’s moving average.

What are the key terms related to beta?

Although investors will typically not have to calculate beta for themselves, it’s helpful to understand the meaning of two variables that are used in the formula for beta. These variables are covariance and variance.

  • Covariance is a measurement of how two stocks move together. If the number is positive, it means the price movement is generally correlated (i.e. when one stock goes up, so does the other and vice versa). If the number is negative, it means the price movement is generally not correlated (i.e. when one stock goes up, the other goes down and vice versa).

  • Variance measures how far a stock moves in relation to its mean. In the case of beta, the mean is the benchmark being used.

Beta is found by dividing covariance by variance. 

Covariance helps measure how closely individual stocks move relative to the overall market or index. If the direction of their momentum, the beta will be positive. If their momentum is oppositional, the beta will be negative.

Variance is a measure of the momentum of the stock market, relative to its mean. 

A financial advisor—or any investor, really—can leverage the beta calculation to measure individual stocks in terms of risk, relative to the stock market, or even a more specific index or fund, such as the securities in exchange-traded funds or a portfolio of stocks. 

An investment advisor (or formula-savvy retail investor) can then leverage the beta calculation again to build a capital asset pricing model. This more complex formula provides mathematically-backed investment advice about the risk of individual stocks relative to their expected rate of return. Investors can then build an investment strategy to reduce risk and acquire an asset that will outperform the market—minimizing losses and increasing gains. This, of course, is the universal strategy for finance across the board, whether you’re a registered investment advisor or a retail investor. 

Individual investors who are active traders will also want to make sure they do their own beta calculation to assess risk and build a CAPM to assess potential gains. Though it’s not the only stat they need to formulate a strategy, it’s as important as any of the other ones, such as market capitalization and price. 

In many cases, a financial website will give what’s known as the “provided beta” for a particular stock. For active traders, financial software programs will also provide the beta value. When using a provided beta, investors should pay attention to two variables.

First, it’s important to understand what benchmark is being used to determine beta. Since the beta shows a correlation between a particular security and something, an investor needs to know what that something is. As pointed out above, for U.S. stocks it is common for beta to be expressed as a correlation to a stock index, usually the S&P 500, but not always. In some cases, the Dow Jones Industrial Average (DJIA) may be used, or even the NASDAQ.

The second thing an investor will need to know about a stock’s beta is the time frame that is being measured. If you’re a long-term investor, you may want to know the beta over several years. If you’re an active trader, you’ll probably be more interested in the beta over a much more recent timeframe.

A personally calculated beta, on the other hand, is one that investors will calculate for themselves. To calculate beta, investors will have to know the covariance between the return of the stock being analyzed and the return of the benchmark for that stock as well as the variance of the market returns.

As we mentioned above, many financial software programs will do the calculation for you. It is also possible to use an Excel spreadsheet to calculate beta. For many investors, particularly those who are engaging in day trading, a personally calculated beta may be more accurate for their needs.

Beta can get confusing if an investor gets hung up on positive and negative. When an investor sees a negative number, they instinctively think a stock is falling (i.e. generating a negative return). That is not necessarily the case with a negative beta. Here’s why:

Beta is a correlation between the price movement of a security and a benchmark related to that security. For these examples, let’s assume an investor is buying a U.S. stock that is being benchmarked to the S&P 500.

The beta of the S&P 500 is 1. The simplest explanation for this is that in establishing a benchmark, you’re dividing one thing by itself and that will always equal 1. Therefore, knowing the beta of the S&P 500 is 1, investors can interpret the beta of a particular stock in the following ways:

Beta of 1: This means a stock is highly correlated to the S&P 500. This means that if the S&P 500 index is up for the day, the stock is more than likely going to be up for the day and vice versa. A beta of 1 also means that price movement will probably be very similar. In other words, if you were to overlay the stock’s price movement over the S&P 500, the two lines would look very similar.

Beta of less than 1: This means a stock is not very correlated with the market. Sometimes it will follow the trend in the market, but sometimes it won’t. In terms of price movement, a beta of less than 1 indicates that the stock is less volatile (i.e. less reactive to price movements in the broader market).

Beta of more than 1: This also means a stock is not very correlated to the market. However, unlike a beta of less than 1, this means a stock is more volatile (i.e. more reactive to price movements in the broader market).

Beta of less than 0 (i.e. a negative beta): This means a stock is inversely correlated to the market. The tendency of the stock is to move in the opposite direction as the market. The higher the negative number, the more volatile the stock.

As you can see, beta is all about its relationship to the number 1. The closer the number is to 1, the more it is correlated to the market, the further it is from 1, the less it is correlated. 

It’s important to understand that beta is a multiplicative factor. A beta of 1.3 means that a stock is 30% more volatile than the market. First and foremost, beta is about projecting risk, not return.

Let’s go through some examples.

  • Microsoft has a beta of around 1.25. This means an investor can reasonably expect that this stock is 25% more volatile than the market. This would be somewhat expected of a stock like Microsoft in the technology sector.
  • Walt Disney Company has a beta right around 1.03. This puts its volatility right in line with the broader market. This is what you might expect from a blue-chip stock.
  • In contrast, Duke Energy has a beta of around 0.27. This means it is not a very volatile stock, which is what investors would expect from a utility stock. This doesn’t mean that the stock is underperforming.

A beta can also be much higher than 1. There are some stocks that have a beta of 2 or more.

One of the most important things to keep in mind is that beta is not an indication of price performance, but rather of potential volatility. A positive beta does not mean that a stock is going up in price. In fact, a stock that has a positive beta while the market is falling is more than likely falling at a higher percentage rate than the market. 

Likewise, a negative beta does not mean that a stock is going down in price. When the market is trending lower, these stocks will tend to be rising. A negative beta also does not mean that a company is underperforming. It simply could be in a sector that naturally works in opposition to the broader market. Stocks of gold mining companies and gold ETFs are good examples. You should expect these stocks to have a negative beta compared to the market because gold (and many other precious metals) tend to rise when the market falls and vice versa.

How to Use Beta for Diversification

How can knowing the beta help investors create a more diversified portfolio? For starters, diversification is not just about investing in different asset classes. It's about investing in different types of assets within those classes. This is where beta can be a very useful measurement.

Many investors think they are diversified when they’re actually not. For example, you can look at two blue-chip stocks. In our example above, we showed the Walt Disney Company with a beta of 1.03. Another blue-chip stock, The Coca-Cola Company has a beta of 0.60. So, you can have quite a difference in volatility between two stocks that, based on market cap and other factors, look to be equal.

Using our example above, if an investor was looking for growth, they will want to look at stocks that have a beta above 1 (like Microsoft, for example). This gives them a greater chance of a higher return for a higher risk of the stock losing value when the market goes down. However, they can hedge this volatility by adding a variety of stocks that are closer to 1, depending on their risk tolerance. Investors who are more active traders may also wish to look at stocks with negative betas if they predict the market will go down.

As we mentioned above, it’s important to understand what beta is using a benchmark and the timeline that is being measured. If an investor is looking at a mining stock or ETF for example, knowing that it has a negative beta, while helpful, may be somewhat obvious. They may need more information to perform greater fundamental or technical analysis to better assess whether a stock belongs in their portfolio. One way to do this may be to calculate its beta as compared to a precious metals index.

Also, beta does not take into account recent news events that may impact a stock. There are some programs that will calculate a time-varying beta estimate which attempts to take into account factors that affect the characteristics of a company that may affect the way its beta is calculated. However, in general, it would take a significant change over a significant period of time to change a beta in a meaningful way. That's why day traders and other short-term investors look at other technical cues to decide on whether to invest in a stock.

High beta stocks do carry some risks. Stocks with high betas are more volatile in comparison to the overall market or index. Beta actually says nothing about the direction of a stock’s momentum in price, or the relative strength of the company. 

If a stock price is ballooning beyond the pace of the market, the company may be overvalued. Eventually, that bubble will pop, leaving investors with great losses. Smart investors and traders do not ride waves of hype. Conversely, a high beta may indicate that a company’s stock price is plummeting due to some current events that might have a longstanding negative impact, such as downsizing or bankruptcy. 

High beta stocks may indicate a history of frequent movement in opposition to the overall stock market. These types of stocks are generally volatile and can throw off investors who do not have experience riding market waves—that is, knowing when to buy and sell. If an investor is involved with active trading and prefers to minimize their risk, they can also balance out their trading with some low beta stocks. These less-volatile securities can stabilize their portfolio of stocks by compensating for some of the losses incurred by high beta stocks that deviate from an expected return. 

A smart beta strategy can be used to minimize the risk impact of high beta stocks. This type of strategy might combine something passive and more stable, like a dividend investing strategy, with active trading in order to minimize losses from the most volatile stocks in the fund. 

Investors working with high beta stocks are hoping to cash out on the stock price waves, buying low and selling high. They may have scoured lists of cheap stocks to buy or stock market gainers in their search for potential profits, but if they’re playing a short game like day trading, finding stocks with the most momentum can provide an easy entry and exit strategy to cash out on the same day. 

Beta only provides information about the momentum of individual stocks in relation to the stock market. Active trading involves looking at other stats and making decisions accordingly. However, high beta stocks will have price swings that can lead to great gains, if bought and sold appropriately. It’s important for active traders using the beta calculation (and other stats) to consider the alpha and beta of a stock—the former being an indicator of how much return a stock historically provides relative to its risk. 

Of course, investors looking for the most stable investments will want to look at a capital asset like rental property, treasury bills, or mutual funds—avoiding higher beta stocks, or even the whole process of analyzing beta and calculating risk as they buy and sell securities. But while these investment strategies can minimize losses, they don’t fund great gains, either. Investors who want steady gains but minimal risk should consider looking into securities that generate dividends

High Beta Stocks

Beta is one of the fundamental regression analysis metrics that an investor can use to assess the volatility of a stock compared to a benchmark index, such as the S&P 500. Although beta is not used to predict specific price movement, it provides a general sense of how a stock will trend compared to the overall market. 

Investors with a low-risk tolerance will probably want to have stocks with a beta of 1 or lower. Investors with a higher risk tolerance should look at stocks with a beta above 1 because of the potential for a higher return. Investors who are not interested in cashing out on a risk-reward relationship might explore other options, such as the best growth stocks. But even then, a stock’s beta can provide a forecast of how volatile it will be in the future—and in turn, build a capital asset pricing model to determine potential reward. 

Because of its utility as an assessment of volatility, beta is a metric used in both fundamental analysis and technical analysis. Beta can help investors take an objective look at their portfolio and give them direction on how to maintain proper diversification. However, like any metric, beta has its limitations. Investors who are looking for specific indicators will need to look beyond beta to assess if a stock is right for their portfolio, such as a fundamental analysis of a company.


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