What is Beta (Coefficient)
Beta is an investment or investment portfolio volatility measure. The beta coefficient allows investors to visualize the riskiness of an investment or portfolio by comparing it to the inherent market risk. The beta coefficient of an individual stock is calculated as the ratio between the return on the single stock over the market return. Betas can be greater or lower than one, and are referred to as aggressive or defensive respectively. Aggressive betas involve taking on greater risks, however, they also imply possibly higher returns. Betas are considered when an agent is deciding whether or not to include an investment in a portfolio.