Are you ready to learn how to use beta alongside fundamental analysis? 🤑
💡Beta = a measure of a stock's volatility and can help you decide whether a stock is too risky or not. 🤓
The greater the Beta, the more volatile the stock will be. 🚨
If you are looking for a wild ride with lots of ups and downs, a high Beta stock is for you. 🏄
But if you prefer a more tranquil experience, a low Beta stock is the way to go. 🧖
A lower beta means the stock is less volatile 🏖️
You can also use beta to measure the volatility of a portfolio. 🦺
If your portfolio has a beta of 1, it's as volatile as the market. 🤔
If your portfolio has a beta of 0.5, it's half as volatile as the market. 🤓
Sometimes beta can be the result of a stronger company, a weaker company or even unrelated events, like market-wide trends! 📊
Therefore, beta is also a measure of systematic risk. 🧐
💡Systematic risk = risks that affect the entire market, such as economic downturns or political events.
A high Beta stock is more exposed to systematic risk than a low Beta stock. 📓
So, you can use Beta to determine how systematic risk you’re comfortable with as well ✍️
Overall, beta can be used to determine risk & volatility to ensure you’re making investments within your comfort zone 🤝