Measuring Volatility

Sep. 23, 2024 | RedChip Companies


Investors can assess a stock’s volatility by checking its BETA coefficient. "BETA" measures a company’s stock volatility compared to the overall market. A stock with a BETA of 1 is expected to move in tandem with the market or be equally as volatile as the market. Stocks with BETAs lower than 1 are less volatile than the market, and the lower the number, the higher the chance of preserving your capital. Stocks with BETAs higher than 1 are considered to be more volatile than the market and will rise and fall faster. If you’re looking for stocks with higher risk and higher rewards, you should study stocks with higher BETA numbers. A couple of examples of high-beta stocks include FaceBook (FB), Goldman Sachs (GS), First Solar (FSLR), and Beazer Homes USA Inc. (BZH).



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