Beta
Measure of a stock's volatility relative to the overall market.
Definition
Beta quantifies the sensitivity of a stock's returns to movements in the broader market (typically the S&P 500). A beta of 1.0 means the stock moves in line with the market. A beta above 1.0 indicates higher volatility, while below 1.0 suggests lower volatility. Bank stocks tend to have betas between 0.8 and 1.3.
Why It Matters
Beta helps investors understand the systematic risk of their holdings. Higher-beta bank stocks (like investment banks) will amplify market moves, while lower-beta utilities or community banks provide more stability.