Investment Glossary

A statistical term used to compare the risk of an individual security or portfolio to that of the market as a whole. In general terms, a security with a beta of 1.5, will move, on average, 1.5 times the market return; the stock's excess return (over and above a short-term money market rate) is expected to move 1.5 times the market excess return.

Beta also represents systematic risk that cannot be mitigated by diversification.