A measure of the volatility - or systematic risk - of a security or portfolio relative to the market as a whole.
Also known as the "beta coefficient". Beta is calculated using regression analysis, and you can think of beta as the trend of a security's gains to respond to the swing of the pendulum in the market. A beta of 1 indicates that the price of the security will move with the market. A beta of less than 1 indicates that the security will be less volatile than the market. A beta greater than 1 indicates that the price of the security will be more volatile than the market. For example, if the beta of a stock is 1.2, that is theoretically 20% more volatile than the market. Many utility stocks have a beta of less than 1. Conversely, most high-tech stocks have a beta greater than 1, which offers the possibility of a higher rate of return, but also involves more risk.