Glossary
Beta
Definition
Beta is a measure of how much an investment tends to move relative to the overall market, where the market itself has a beta of 1.0.
A stock with a beta of 1.3 has historically moved about 30% more than the market in both directions; a beta of 0.7 implies milder swings. Beta is calculated from past price behavior, so it describes history rather than promising the future.
Why it matters in practice
Beta helps distinguish market risk from manager skill: a fund that beat the market with a beta of 1.4 may simply have taken more risk in a rising market, not added value. It is also a rough guide to how a holding will feel in a downturn — high-beta positions tend to fall harder in bear markets.
Related terms: Alpha · Volatility · Standard Deviation · Bear Market
Glossary definitions are educational and general. They are not investment, legal or tax advice, individual circumstances vary, and simplified definitions necessarily omit edge cases. Figures, limits and rules cited change over time — confirm current rules before acting. Aduna Capital LLC is a California DFPI-registered investment adviser (CRD #311270). Aduna Capital LLC is not affiliated with, endorsed by, or sponsored by CalSavers, the California State Treasurer's Office, CalPERS, CalSTRS, or any other retirement system, employer or school district named on this page.