All toolsRisk

Beta Coefficient Chart

Measure how much an asset moves for each 1% move in its benchmark.

What is beta?

Beta measures an asset's sensitivity to moves in a benchmark, usually the broad market. It is the slope of a regression of the asset's returns against the market's returns. A beta of 1 means the asset tends to move one-for-one with the market; a beta of 1.5 means it typically moves 1.5% for each 1% market move, amplifying both gains and losses. A beta below 1 signals a defensive, lower-sensitivity asset.

Asset vs Market Returnsscatter

Illustrative scatter of asset returns against market returns; the slope is beta. Synthetic data for demonstration.

Beta is the cornerstone of the Capital Asset Pricing Model and the quickest way to describe how a holding behaves relative to the market it lives in. This tool scatters an illustrative asset's returns against market returns; the slope of the cloud is the beta, and its tightness hints at how much of the asset's movement the market explains.

Reading the scatter and the slope

Plotting asset returns on the vertical axis against market returns on the horizontal produces a cloud of points; fitting a straight line through them gives beta as the slope. A steep line means the asset amplifies market moves; a flat line means it barely responds. The tightness of the cloud around the line reflects how much of the asset's variation the market explains, which is a separate matter from the slope itself.

Read more
That distinction — slope versus fit — trips up many analysts. A stock can have a high beta yet a loose scatter, meaning it is highly market-sensitive but also driven by large idiosyncratic swings the market does not explain. The R-squared of the regression captures how much of the variance is systematic; beta alone tells you the direction and amplitude, not the reliability of the relationship.

Beta above, below and around one

A beta above 1 marks aggressive, high-sensitivity assets — think cyclical or highly levered names — that outrun the market in rallies and fall harder in selloffs. A beta below 1 marks defensive assets like utilities or staples that cushion drawdowns at the cost of muted upside. A near-zero or negative beta, rare among equities, indicates a holding largely uncorrelated with or hedging against market direction, prized for diversification.

How Quadesto computes it

Quadesto regresses your asset's returns against a chosen benchmark series and reports beta as the fitted slope, together with alpha, R-squared and the correlation. You map the two return columns and the engine runs the ordinary-least-squares fit. The scatter above is rendered from paired market and asset returns, and the regression output embeds into risk reports.

Build this with your own data

Upload a CSV or connect a live source, and Quadesto renders this exact chart — styled, computed, and embeddable in your reports and newsletters. Free to start.

Create free account

Related tools

Scatter Plot

Open tool

Correlation Matrix

Open tool

Sharpe Ratio Comparison

Open tool

Returns Distribution Chart

Open tool

Explore all free financial tools, browse the finance glossary, or see how teams use Quadesto.

Frequently asked questions

What does a beta of 1 mean?
A beta of 1 means the asset tends to move in line with its benchmark — a 1% market move is typically matched by a 1% move in the asset. Betas above 1 amplify market swings; below 1 they dampen them. The benchmark's own beta is 1 by definition.
How is beta calculated?
Beta is the slope from regressing the asset's returns on the market's returns, equal to the covariance of the two divided by the variance of the market. In practice you fit an ordinary-least-squares line through a scatter of paired returns; that line's slope is the beta.
What is a negative beta?
A negative beta means the asset tends to move opposite to the market — rising when the market falls and vice versa. It is uncommon in equities but valued for hedging and diversification, since it can offset losses in a broad selloff. Gold and certain options strategies sometimes show it.
Does high beta mean high risk?
High beta means high sensitivity to market moves, which amplifies systematic risk. But it ignores idiosyncratic risk, the asset-specific swings the market does not explain. A high-beta stock with a loose regression fit carries substantial risk beyond what beta alone conveys, so check R-squared too.
Can I estimate beta for my own asset?
Yes. Upload paired asset and benchmark returns to Quadesto, map the two columns, and the engine reports beta, alpha, R-squared and correlation from an OLS regression. The scatter and fitted line embed directly into risk and factor reports.