beta

Definition 1

UK: One of the four classifications (with alpha, gamma, and delta) of the largest and most traded stocks on London Stock Exchange (LSE) under the normal market-size classification system.

Definition 2

US: Measure of the securities-market risk ('systemic risk'), it is an indicator of the volatility of a stock (or a portfolio of stocks) relative to a benchmark, such as Standards & Poor's 500 composite index (S&P 500), which is given a beta value of 1.00. Every listed stock is assigned a beta value (based on movements in its price) in 'beta tables' published by Standard & Poor's and Morgan Stanley investment Corp. A beta-value of 1.0 means the stock has moved up and down roughly in step with S&P 500; a beta value of 1.25 means that the stock is expected to do 25 percent better than the S&P 500 in an up market and 25 percent worse in a down market. Conservative investors usually prefer stocks with low beta, whereas those looking for high risk-reward ratios choose high beta stocks. See also alpha.