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what is stock beta in finance easy way used quickly


what is stock beta in finance
what is stock beta in finance

hey this is Anit Shajidul and thanks for joining me here at blackandwhiteunknown.com today where I share with you some insight about trading investing in the stock market now in this week's episode what I'd like to do with you is share with you what is beta finance and how can you use beta finance on the stock market tables to make trading decisions or investing decisions for your personal portfolio so first off before we even get into what is beta finance the more important question is why would you want to know this why would you want to know what beta finance is all about well the thing is is what beta finance really tells you is it tells you the volatility of a certain stock or security so how big of those movements how big not a direction but how large those movements can be for a stock where security relative to a neutral level so what does all this mean in layman's terms or in simple terms well it means that if you're looking for a stable company if you're looking for a stock that doesn't whipsaw around a lot if you're looking for a stock that moves in a nice line fashion you want a smaller beta finance if you want to stock that moves around a lot quicker and has a higher potential to make you more money or has a higher potential to go to the upside quicker or go to the downside quicker typically great for day trading as well then you want a higher beta finance so let's look at beta finance in more in depth basically the stock market itself okay so the market itself has a beta finance of 1 ok so if we have the market as a beta finance of 1 this is how it moves so let's just pretend that this angle and this volatility is 1 okay stocks that have a higher volatility will have a higher beta finance so they may have a beta finance of something like let's just say 1.3 and if you have a beta finance of 1.3 this means typically you're 30% more volatile than the market so that volatility may be something more like this so that stock has a greater volatility as it's going up or down now if we're looking for lower betas finance companies like Microsoft or Proctor and Gamble you know if you're looking for a beta finance  of let's say point eight so this would be zero point eight that volatility might be something like this it might be very small and it moves very slow it moves very slow to the upside or the downside so you're a little bit more stable and that's why when things are in a panic they sell off very big people step to the lower beta finance stocks they jump to the ones that have more stability on the other hand when things are going great they'll jump into the higher beta finance names because that is what they want they want a huge run to the upside they want the fastest stocks that are moving the quickest in the shortest amount of time alright so here what I've actually took a moment to do is write down the different betas finance for a different company so Apple right here as you can see we have a beta finance 1.06 so what does that mean that means that it moves very similar to the stock market especially now that it had the stock split and and so forth so 1.06 is it's moving relative to how the market is moving in terms of volatility how violent it's moving Procter & Gamble here P&G is moving at point eight nine beta finance so that means it's more stable than the market and move slower than the market Verizon we have 0.67 which means again it's even slower it's more stable than the current market than the way it is it's moving at a stable pace now if we take a look at these next two these next two like Netflix and Priceline they move at a higher beta finance than the market so that's one point four four for Netflix and one point five one for Priceline which means that they move about 51 percent or 44 percent more than the market moves in terms of volatility so in the end what does this mean and what does it do to help you choose stocks well if you're not a great stock picker if you're not looking at technical analysis as much one of the ways to see how violent ace moves is to look at this beta finance when you're looking at the beta finance you're able to see that violence the violence swings that that stock can have if you have a portfolio that is extremely volatile you probably have a lot of beta finance okay on the other hand if you want something a little bit more stable you probably want things that have a lower beta finance so if you're having wild dreams and you're not able to digest those dreams emotionally then you may need to get something with less beta finance less volatility or you could trade less shares of course but if you're moving too slow if things are just moving really really slow in the markets for you and your stocks and your investments then you probably have too low of a beta
finance and you want a little more beta finance so that way you can have more upside swings or
what is stock beta in finance
what is stock beta in finance

more movement in the markets whether that's upside or downside depending on if you're trading long or short now I personally don't know your investment style your risk appetite your personal plan your risk tolerance and all those other things along with your goals and retirement strategies so for you you might have a higher beta finance than me or a lower beta finance than me or higher or lower than someone else that you know and it's not that important of what type of beta finance that you have what's more important is you get the beta finance that suits your needs now on the other hand once you get more comfortable with choosing stocks once you get a little bit more insight about stocks how they move how they act how they behave on a day to day basis you will already have an inside feeling you will already have some insight to knowing how they really move on a day to day basis you will know that Apple moves a lot more than Proctor and Gamble or Verizon on a typical day to day or Netflix moves a lot more than Procter & Gamble and Verizon and Apple on a day to day basis so that's just part of just being in the markets and watching those charts on a day to day basis over time you probably won't really need to look at the beta finance but initially if you're getting started looking at the beta finance on the chart or on those reports is really helpful and handy when you just getting started and especially if you're looking for kind of a buy and hold or a longer-term portfolio it gives you a good way to kind of figure out how much risk and volatility you want within your account thanks for joining me and watching this Blog if you enjoyed this  Blog and you want to see other Blogs like this one or you want to stay up to date to some of the free tips and tricks that I have up coming for my Blog post Please Wait I write down soon it is a more advanced post I am preparing I'll be sure to send you some of those Blogs and you all when they are released when you're on that Blog don't forget to check out some of the review IOS update MOBILE and other products that I have available in future thanks again for joining me and remember to do what you love to contribute to others but most importantly live life abundantly see you next time and peace

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