Importance of Beta

Risk plays a big role in investing.

Wouldn’t it be nice if there was a magic number for risk? 🤔

As a quick reminder, 💡volatility = how much a stock’s price shifts and therefore how risky and unpredictable it is ✍️

Fortunately for you, there is a magic number! 🔮

Beta is a measure of a stock's volatility compared to the rest of the market 📊

Think of beta like a rollercoaster. 🎢

When the overall market is on a rollercoaster, some stocks are on a wild ride while others are on a slower, more gentle ride. 📊

Beta helps you understand which stocks are on the wild ride and which are on the gentle ride. 🧠

So, beta helps you understand how a stock might change relative to the overall market 💪

In the next lessons, we’ll go over calculating beta as well as interpreting it 👏

So, now you know that beta is a stock’s volatility compared to the rest of the market 🤓