Analyze stock volatility relative to the market using Beta and CAPM.
S&P 500 Beta = 1.0
The Capital Asset Pricing Model (CAPM) describes the relationship between systematic risk and expected return. Higher beta means higher risk, demanding higher potential returns.
Expected CAPM Return
Above Average Volatility
Market Premium
5.50%
Correlation
Moves with Market
Volatility Warning
A beta of 1.5 means the stock is 50% more volatile than the S&P 500. If the market drops 10%, expect this stock to drop roughly 15%.
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